Iran war wipes out 2.6B barrels of oil supply

The ongoing conflict involving Iran and a U.S.- and Israel-led coalition has resulted in the removal of 2.6 billion barrels of oil from the global supply. This disruption has drastically reduced traffic through the Strait of Hormuz to just 10% of its normal level. The strait, a critical chokepoint for global oil transportation, has seen significant impacts on shipping routes due to the military confrontations. The situation underscores a severe escalation in the region, as evidenced by the substantial supply shock affecting global oil markets. The market for the Strait of Hormuz traffic normalization by August 31 is currently priced at 13.5% YES, reflecting a slight increase from the previous 12% held consistently over the past week. The ongoing blockade and military activities in the region have led participants to maintain low expectations of a return to normalcy in the near term. Pricing suggests that participants view the possibility of traffic normalization by mid-August as even less likely, with the level at a mere 2.3% YES. The broader geopolitical tensions and military activities are contributing to a cautious market outlook. The persistent closure of the strait, alongside ...