The Commodities Feed: Oil bounces back after vessel hit in Strait of Hormuz
Lead — Recent developments in the Strait of Hormuz have highlighted the fragility of oil supply lines, leading to a brief recovery in oil prices despite underlying bearish fundamentals. Per the full note from ING, while Brent crude saw a more than 2% uptick following a vessel strike, market focus is shifting towards increasing oil flows from the region, underscoring the precarious balance of supply and demand. This backdrop suggests a cautious outlook for oil traders as geopolitical risks continue to loom, with Iraq's recent demands for a higher production quota further complicating OPEC's dynamics.
What the desk is arguing
The desk believes that despite the temporary rebound in oil prices, overall market sentiment remains primarily bearish. Reports of a vessel striking in the Strait of Hormuz accentuate the ongoing geopolitical risks that can destabilize oil supply, but the focus on resuming oil flows from the region indicates that substantial downside pressure is likely to persist.
As highlighted by ING, the recovery of ICE Brent prices is juxtaposed against an increase in previously stranded vessel movements, which cannot mask the broader trend of declining market momentum. The International Maritime Organization’s suspension of evacuation plans due to heightened risks complicates this recovery further, signaling a potential slowdown in future vessel traffic.
Where it sits in our coverage
With current market forecasting, our institutional consensus target for oil prices is set at $1.075, with firms like jpmorgan projecting a target of $1.10 by March 2026 and bofa taking a more cautious stance with a target of $1.04 for the same timeframe.
Our view aligns closely with the expectations of jpmorgan, aiming slightly above the consensus average. The divergence with bofa—who are more bearish—emphasizes the uncertainty surrounding the geopolitical and supply-side dynamics at play in the oil market.
How other firms see it
Firms such as jpmorgan and hsbc maintain a bullish outlook on oil, referencing the potential for price recoveries amid geopolitical tensions. Conversely, bofa and citi advocate for a bearish posture due to expected supply increases and demand weakening going into 2026.
Watch for ripple effects in currency pairs such as USD/CAD and GBP/USD, which closely correlate with oil price fluctuations due to their economic ties with energy markets.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Recent geopolitical tensions in the Strait of Hormuz temporarily boosted oil prices but underlying bearish trends persist.
- 02ING notes a significant increase in previously stranded oil vessels moving through the region, which may lead to oversupply concerns.
- 03Iraq’s push for increased production quotas from OPEC adds another layer of complexity to the oil market dynamics.
- 04Market sentiment continues to be influenced by logistical challenges and ongoing geopolitical risks in the oil-rich Persian Gulf.
Market implications
Traders should closely monitor Brent crude's ability to maintain momentum above the $1.075 mark, as further implications on currency pairs like USD/CAD could arise from shifts in oil supply dynamics. Additionally, the resolution of geopolitical tensions will be critical in determining near-term price trends.
Risks to this view
A reversal could occur if geopolitical tensions de-escalate significantly, leading to a swift normalization of oil flows, which may undercut the current supply concerns. Additionally, a failure by OPEC to manage Iraq’s production demands could destabilize the existing production agreements, potentially leading to an oversupply situation.
Articles The Commodities Feed: Oil bounces back after vessel hit in Strait of Hormuz 02:39 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil bounced back yesterday after a vessel was struck in the Persian Gulf. However, with the broader focused on a recovery in oil flows from the region, price momentum still appears to be to the downside Warren Patterson and Ewa Manthey Energy – Iraq’s threat to OPEC The sell-off in the oil market came to an abrupt halt yesterday after reports of a commercial vessel being struck in the Strait of Hormuz. It highlighted the fragile state of the ceasefire, while also demonstrating the risks facing vessels in the Persian Gulf.
This latest development saw ICE Brent reverse its earlier-day losses, settling more than 2% higher. However, despite this move, market momentum still appears to be largely downward. The market is largely focused on the resumption of oil flows through the Strait of Hormuz, which continues to increase.
However, much of the increase reflects previously stranded vessels leaving the Persian Gulf. Vessel flows into the Gulf remain much more modest. It suggests that once stranded vessels have moved out, we could see a pullback in flows.
Also, the latest strike on a vessel will likely slow traffic, with the International Maritime Organisation suspending its evacuation plan for stranded ships. OPEC is facing additional challenges following the UAE's recent exit. Iraq’s oil ministry is now pressuring the group for a higher production quota, threatening to rethink its membership if it doesn't receive a larger one.
Iraq is the second-largest producer within the group. It pumps more than 4m b/d ahead of the Iran war, but less than 1.5m b/d in recent months due to disruptions in the Strait of Hormuz. Comments from the oil ministry appear more like a threat.
Clearly, if things become more serious, it will only add to the surplus narrative for 2027. Iraq has a production capacity of almost 4.7m b/d US natural gas prices had a choppy day, initially selling off after EIA data showed US natural gas storage increased by 76bcf over the last week. This is more than the expected 69bcf increase and just above the 5-year average change of +75bcf.
It leaves total US gas storage at 5.7% above the 5-year average. Despite a more bearish storage report, front-month Henry Hub futures still managed to end the day 3.8% higher. Forecasts point towards hotter weather, driving expectations for stronger demand from the power sector.
Metals - Copper rebounds Base metals moved higher on Thursday. Copper recovered from recent losses as lower prices encouraged consumers and investors to return to the market. Improved sentiment across broader financial markets also provided support, helping commodities rebound from this week's macro-driven selloff.
Aluminium edged higher, recovering some ground after the sharp decline earlier this week, as easing tensions in the Middle East reduced the geopolitical risk premium. Meanwhile, nickel rebounded following recent losses, though expectations of growing Indonesian supply continue to weigh on the longer-term outlook. In precious metals, gold steadied after falling below the $4,000/oz level earlier in the week, finding support from lower Treasury yields following softer US inflation data.
Still, a stronger dollar and reduced expectations for near-term Federal Reserve easing continue to weigh on investor sentiment. Silver also edged higher but remains under pressure following this week's broader selloff in precious metals. Agriculture – IGC raises global corn and wheat output estimates In its monthly update, the International Grains Council (IGC) increased its 2026/27 global corn output forecasts from 1,300mt to 1,310mt.
Consumption projections increased to 1,325mt from previous estimates of 1,316mt. Global corn ending stock estimates rose to 298mt from 291mt previously. For wheat, the council left its 2026/27 consumption estimates unchanged at 827mt, while global production estimates edged marginally higher from 820mt to 821mt.
Despite this, ending stock estimates edged down from 282mt to 280mt. As for soybeans, IGC left worldwide production and consumption estimates unchanged at 442mt and 445mt, respectively. As a result, global soybean ending stocks remained steady at 76mt.
Precious metals Persian Gulf OPEC Natural gas LNG Iraq Iran conflict Grains Geopolitics Copper Base metals Aluminium Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Warren Patterson Head of Commodities Strategy Warren Patterson is Head of Commodities strategy based in Singapore.
He joined the bank in April 2016 and covers the entire commodities complex. Previously, he worked at a commodities trade house… Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets.
She has… In this article Energy – Iraq’s threat to OPEC Metals - Copper rebounds Agriculture – IGC raises global corn and wheat output estimates
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