Oil price erases all war premiums in 11 days, Brent falls below pre-war levels, but inventory concerns may trigger a rebound

BlockBeats News, June 26th. The international oil price has rapidly fallen back to the pre-US-Iran conflict level, giving up all the gains made during the conflict in just 11 days, a surprising trend for the market. Brent crude oil hit a low of $72.06 on Thursday, dropping below the pre-war settlement price of $72.48, and has fallen by over 39% from the March high of $118.35; WTI crude closed at $71.92, down by about 36% from the peak.

This rapid decline has exceeded expectations. Previously, the industry generally believed that it would take time to clear the strait of mines and months to restore Gulf production capacity, but the actual progress has been much faster. Analysts at JPMorgan Chase pointed out that the market has rebalanced through a "significant different combination of demand loss and inventory drawdown," a stark contrast to the initial assumptions.

However, rapid easing may not be stable. S&P Global data shows that on Wednesday, 78 oil tankers passed through the Strait of Hormuz, reaching a new post-conflict high, but still only equivalent to 57% of the pre-war level, with many of them being vessels that were previously stranded and have now departed in a concentrated manner.

The Chief Commodity Strategist at TD Securities warned that the market may have overestimated the speed of supply and inventory recovery. Inventory pressure has become a key variable. U.S. Cushing inventories fell to 19 million barrels last week, below the level of about 1 million barrels needed to maintain system stability; TD Securities expects a global additional drawdown of 600 million barrels by October. Once inventories fall below a critical threshold, oil prices could quickly rebound.

Looking ahead, analysts at SMBC Nikko Securities believe that the market is already in an "oversold" state, and oil prices are expected to rise to the $80 range in the coming weeks. Full production recovery from countries such as Iraq and Kuwait is expected to wait until autumn this year, at which point the supply-demand dynamics may once again change.