Tankers defy sharp escalation of Iranian attacks to keep crude oil flowing through Strait of Hormuz
In October, we have seen a notable increase in attacks on oil tankers transiting the Strait of Hormuz, underscoring the escalating tensions in the region. However, despite these threats, tanker operators are maintaining significant crude oil shipments, which is a marked improvement from the drastic decline in exports observed in March. This resilience in oil flows is pivotal, as it alleviates fears of an immediate supply shock and keeps the oil market from exacerbating inflationary pressures. As the conflict evolves, the steady throughput through this critical chokepoint helps support risk assets and underlines the limited safe-haven appeal of the Japanese yen against the dollar.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). This suggests a balanced outlook, with positioning largely shaped by geopolitical developments including the situation in the Strait of Hormuz.
How firms align
Goldman is positioned at 1.12, suggesting they see potential upside in the wake of sustained oil flows despite rising geopolitical tensions. In contrast, BofA's target of 1.04 indicates a more cautious stance, wary of volatility from the ongoing conflict.
What the data shows
Expectations for further stability in oil supplies may prompt revisions in risk asset positioning, as highlighted in our recent research on the oil market dynamics in /research/oil-supply-dynamics. These developments could lead to a recalibration of currency pairs sensitive to oil prices.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Significant tanker shipments flow through Hormuz despite attacks.
- 02Risk assets are supported as oil flow reduces inflation fears.
- 03Watch for EUR/USD at 1.075 as a pivotal level amid tensions.
- 04Geopolitical developments may sway trading positions dramatically.
Market implications
Traders should monitor the EUR/USD pair around the consensus target of 1.075 for signs of strength or weakness, especially as any further attacks could shift sentiment quickly. Key events to look out for include oil inventory reports and geopolitical updates from the region.
Risks to this view
A substantial escalation in the Iranian attacks that disrupt oil flows could force a sharp reversal in market sentiment, leading to a heightened demand for safe havens like the JPY and a potential drop in the EUR/USD pair.
Sentiment by currency
USD+EUR~JPY~GBP~Composite USD score: +0.35
Sources & References
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