Oil Markets Are Pricing A Supply Surge That Isn’t Guaranteed

AI Summary

Crude oil prices dropped significantly following a 60-day ceasefire agreement between the United States and Iran, causing traders to anticipate an increase in crude supply. Despite this, tensions remain as Iran recently struck a commercial ship in Hormuz, contributing to market volatility with Angolan crude prices falling sharply.

Crude oil prices are in freefall after the United States and Iran agreed on a ceasefire, set to last 60 days. Traders expect the ceasefire to unleash an avalanche of crude, and indeed, tankers are leaving the Persian Gulf in growing numbers. And yet Iran just struck a commercial ship in Hormuz. Bloomberg reported earlier this week that the ceasefire prompted huge discounts in available crude cargoes, noting how Angolan crude was selling at a $10 discount to dated Brent—for the first time in a decade. Not only this, but Chinese refiners were…