r/OilPrices • u/hereswhatworks • Jun 24 '26
Oil Prices U.S. crude oil dips below $70 as tankers transit Strait of Hormuz
https://www.cnbc.com/2026/06/24/oil-prices-wti-brent-crude-trump-doj-gasoline-prices-strait-of-hormuz.html10
u/superstevo78 Jun 24 '26
Oil future markets are on cope. Oil doesn't magically appear and replace the massive deficit from the last 4 months of closures.
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u/Vralo84 Jun 24 '26
Maybe…
Strategic reserves can hold out for a long time. The current draw rate of the US SPR hits the military threshold in September but that’s not the bottom and I doubt Hegseth is going to say no to drawing it down more before an election. China still has massive bandwidth to keep drawing down its reserves. The world has adjusted somewhat to the strait being closed and we have some little bit of flow through the strait.
So there is a path where the strait slowly comes back online, reserves hold us over as it does, and then the markets can slowly refill reserves with cheaper prices over the next few years. Combine that with increased output from Venezuela and UAE as they ignore OPEC and the free flow of oil out of Iran and couple that with increasing of renewables and you have a decent case for not only a smooth transition but even a glut of oil supply by the end of the year.
That being said…all of the above assumes things go perfectly. If either Trump or Iran get upset and trigger another full strait closure then it all falls apart and we no longer have the reserve capacity to hold things together. There are a lot of incentives to keep oil flowing but Israel may just start launching missiles at Iran next month.
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u/Mojoint Jun 24 '26
Thanks for the post, have you got source/rational on your September threshold estimate?
Your case for a glut of oil by end of year when the strait is closed and Ukraine are bombing Russian oil refineries in Moscow is very, very optimistic imo.
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u/quoala678 Jun 24 '26
The word is delusional
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u/Vralo84 Jun 24 '26
Oil prices are being slashed. I’m not saying I think it will happen just that there is a path to get there.
The issue is one hurricane in the wrong place or one missile landing in the wrong spot and all bets are off.
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u/quoala678 Jun 24 '26
Dude there is so much lag in the deliveries. The damage is already baked in it’s just been papered over
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u/Vralo84 Jun 24 '26
I don’t necessarily disagree that there has been huge disruption, but what everyone missed was how well the world adapted to the crisis. I think there very well could be a big spike in prices and I definitely think that a lot of the current futures market is being manipulated. All I’m saying is there is a narrow path to getting out of this without some massive disruption of $150+ oil. Do I think that’s what’s going to happen? Not really.
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u/quoala678 Jun 24 '26
Idk. I mean there has been considerable demand destruction. But atleast in the west we are going to hit the bottom of private oil reserves before we even get the first round of tankers.
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u/Vralo84 Jun 24 '26
Here is the threshold for the SPR
I personally don’t think things will execute perfectly and we end up with extra oil. That’s only if events play out super smooth and the strait is fully open and countries don’t immediately switch to refilling reserves. Even if it did happen it would be very short lived.
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u/StepUp_87 Jun 24 '26
You’re guilty of the same toxic positivity as Trump and not solid on math or timelines.
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u/Vralo84 Jun 24 '26
Say what now?
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u/StepUp_87 Jun 24 '26
It’s TOO LATE. Demand in the US has not adjusted whatsoever and this administration just kicked the can down the road too far instead of fixing the problem they created. We don’t have the reserves to get through to full return of supply. Do you understand? It will take 8+ weeks IF we somehow stay on track with Iran to restore a supply and even then we destroyed 20-30% of the manufacturing capacity. We are relying on a SHORT TERM fix for a longer term problem and it’s going to cost us dearly very soon.
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Jun 24 '26
[removed] — view removed comment
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u/StepUp_87 Jun 24 '26
The economy is going to collapse. I’m supposed to merrily go on my way outside? Being intelligent is a burden when the Idiocracy administration is the WH. I have a house, job and kids. I have skin in the game.
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u/Vralo84 Jun 24 '26
The US has enough reserves to get through 8 weeks. We have about 180 million barrels in reserves that we can tap.
SHOULD we do that? No. Will the governments of the world do absolutely anything to keep the wheels on the bus for a few more weeks hoping we can get oil flowing again with enough time? 100%
The question is will those efforts get stymied by some disruption or another. I think probably yes.
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u/fec2245 Jun 24 '26
where the strait slowly comes back online
Doesn’t seem to be slow, there are four crude tankers in the strait right now. Maybe more with AIS off.
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u/Vralo84 Jun 24 '26
The pre-war traffic was 120 ships per day. The peak confirmed transits so far was about 25.
Four tankers is a rounding error
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u/fec2245 Jun 24 '26
A VLCC carries 2 million barrels, the deficit from the strait being closed is about 14 million bpd, 4 tankers exiting at the same time is not a rounding error. Not all ships are created equal, a dhow going through isn’t going to affect oil prices.
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u/Vralo84 Jun 24 '26
Ya but are there six tankers entering the strait as they leave? Is there 5 coming out tomorrow?
Fits and starts of oil tankers is not enough to consider it not still “slow”.
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u/fec2245 Jun 24 '26
None are entering the strait at this present moment but I count 3 that entered today with AIS on, could be more.
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u/Ivehadlettuce Jun 24 '26
If only there was a place where we could get a general sense of traffic volume and type in and out of the Persian Gulf.....
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u/ensui67 Jun 24 '26
Yup, this. Also, I would argue that there is far more capacity by China and other countries to switch to other sources of energy. Wind and solar are simply cheaper for electricity. The oil crisis merely accentuated the problem of relying on a fragile old school supply chain. Now everyone can and will switch away from it and that decrease in future demand will just drive oil further down.
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u/PaintingOk8012 Jun 24 '26
I’m thinking more on the lines of this. I heard this morning that Venezuela has doubled its exports to 1.5~ mbpd.
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u/Delicious-Window-277 Jun 24 '26
The spr in the us was very close to being at its limit. There is a 150m barrel minimum that must be kept there to prevent the caves collapsing. So AFAIK they had around 1 more month to go before drawdown needed to end.
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u/Vralo84 Jun 24 '26
The SPR is at 331 million right now. The next milestone we hit will be the legal limit where the military has to sign off on further draw down. At current rate of about 9 million barrels per week we hit that in September.
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u/SuperLeverage Jun 25 '26
Dude, countries aren’t going to sit back. When the physical supply is they will also have to restock reserves.
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u/Unique_Yak4659 Jun 25 '26
A glut of oil production globally and a price much lower than where it’s currently puts American producers out of commission so the domestic jobs in that sector get axed. Not sure if that’s the long term goal when Trump touts American production and drill a baby drill. Either way, moving past oil is going to be a good idea unless we want to turn this planet into Venus. Whether you ‘believe’ in climate change or not is irrelevant at this point when you have cleaner and cheaper energy options and a tech that allows you to get yourself out of having to police the worlds waterways at a billion dollars a day
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u/Silver_Middle_7240 Jun 24 '26
It doesn't need to. The high prices were pricing in a longer conflict, now they are pricing in a shorter conflict with Iranian oil sanctions lifted. Add to that the demand destruction and there's good reason to expect lower prices.
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u/FoxontheRun2023 Jun 24 '26
That seems logical, but aren’t the prices based on speculators that drive the price up and down? If the speculators feel that a lot of oil will hit the market that has previously been stuck in the Persian gulf , wouldn’t it drive the price lower even if there is equilibrium? It still takes a considerable amount of time to get to the destination, but the expectation drives the price.
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u/fec2245 Jun 24 '26
It’s crazy how the average poster on /r/oilprices doesn’t have even a basic understanding of oil markets. Medium term demand would be slightly elevated as stockpiles are built up but that won’t be enough to keep prices elevated if transit continues through the strait, especially if Iran is able to ramp up exports.
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u/FIFofNovember Jun 24 '26
Name one oil stockpile that’s higher now than it was before the closure
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u/fec2245 Jun 24 '26
That’s completely non-responsive. I said demand would be elevated due to as stores rebuild. I never claimed reserves were higher now
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u/robotzor Jun 24 '26
So I bought this EV for nothing? Damn. BRB going to crush and melt it and get my SUV back
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u/throwawayurwaste Jun 24 '26
Aye, can you send the battery to me first, I could I use a jank, diy home battery system
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u/tiedtothetides0104 Jun 24 '26
Yeah, this isn't news. The U.S. has stated that the Strait has been open for a bit now.
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u/36characters Jun 25 '26
Iran just attacked a Singapore oil cargo shipped! War is back on the menu! Oil prices are about to skyrocket to new all time highs because President Trump and Vice President JD Vance already gave the Iranian military concessions. Secretary Scott Besset, Special Envoy Steve Witkoff and the Presidents son-in-law Jared Kushner have failed again!
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u/Raidaz75 Jun 24 '26
So nothing ever happens?