The international oil market is entering a phase where "policy buffers can't keep up with geopolitical shocks." On Thursday, the United States attempted to stabilize market sentiment by easing some restrictions on Russian oil transactions, but by Friday, crude oil prices remained high and were poised for a strong weekly gain, indicating that investors do not believe the additional marginal supply is sufficient to offset the impact of disrupted Middle Eastern shipping lanes.
Why Russian Oil Exemptions Can't Curb Oil Prices
The current exemptions cover Russian crude oil and petroleum products shipped by March 12 but stranded at sea due to sanctions, valid until April 11. They help some buyers complete deliveries, reducing stranded supplies at sea, but cannot directly increase upstream production or restore Middle Eastern routes.
The Core Issue Remains the Strait of Hormuz
The real driver of the current oil price increase is the risk associated with the Strait of Hormuz. Reuters previously noted that this strait carries about 20% of global oil shipments; since February 28, the escalation of conflicts in the Middle East has repeatedly disrupted related flows. Thursday saw oil prices rise again by about 9% because the market considers "persistent closure or low flow operation" a real risk.
Unprecedented Reserve Release, but the Market Isn’t Convinced
The IEA has coordinated the release of a record 400 million barrels of strategic reserves, with the US contributing 172 million barrels, bringing the total release to 572 million barrels. Even so, oil prices remained strong on Wednesday and Thursday, indicating the market is more concerned with the "physical supply capacity in the coming weeks and months" rather than the total inventory on paper. This judgment is based on the discrepancy between the scale of reserve release and price performance.
Market Outlook
In the short term, the pattern of Brent being relatively stronger than WTI will likely continue because Europe is more exposed to maritime supply and energy security issues. Goldman Sachs has raised its March Brent average price forecast above $100, but still predicts that if conflicts gradually ease, oil prices may decline later in the year. This means the market is currently pricing in "sustained high volatility" rather than a permanent supply collapse.
