The recent claim by U.S. Secretary of Energy Chris Wright that Middle East oil flows have normalized is being met with skepticism by analysts and tanker traffic monitoring services. Wright's assertion, made on X (formerly Twitter), suggests that oil traffic through the Strait of Hormuz has increased significantly, with Sunday's traffic alone surpassing pre-conflict averages. However, this claim appears to be at odds with the data provided by the U.S. Energy Information Administration (EIA) and independent ship-tracking services.
According to Wright, the seven-day average for oil leaving the Strait of Hormuz is nearly 9 million barrels per day, and when combined with additional flows from upgraded pipelines and export facilities, the total averages around 15 million barrels per day. On Sunday, over 20 million barrels left the Arabian Gulf region, which is reportedly above the pre-conflict average.
Yet, the EIA's latest Short-Term Energy Outlook (STEO) highlights severe constraints on Strait of Hormuz transits, leading to increased estimates of shut-in crude oil production in the Middle East. This is further supported by Kpler data, which shows a decline in vessel traffic at the Strait of Hormuz. On Monday, only six commodity vessels transited the strait, down from 11 ships in the previous 10-day average.
The disparity between Wright's claims and the available data has sparked controversy. Matt Smith, director of commodity research at Kpler, expressed disbelief, stating that it is impossible to reconcile the discrepancy. This situation raises questions about the accuracy of the U.S. Administration's figures and the potential impact on global oil markets.
The ongoing tensions between the U.S. and Iran, as well as the lack of progress in negotiations, may contribute to the constrained oil flows. The Strait of Hormuz is a critical transit point for a significant portion of the world's oil supply, and any disruptions can have far-reaching consequences. As the situation unfolds, it will be crucial to monitor the oil flows and the diplomatic efforts to ensure a stable and secure energy supply.
In my opinion, the U.S. Administration's claim of normalized oil flows in the Middle East seems to be based on optimistic assumptions that may not align with the current reality. The constraints on Strait of Hormuz transits and the ongoing negotiations with Iran suggest that the region's oil supply could remain volatile. This situation highlights the complex interplay between geopolitical tensions, energy markets, and the global economy.
