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Informist, Thursday, Mar. 5, 2026

 

MUMBAI – Crude oil prices have not risen as sharply as expected due to the ongoing hostilities in West Asia and the closure of the Strait of Hormuz, likely because of a lot of oil on water, according to Homayoun Falakshahi, head of crude oil analysis at global trade analytics firm Kpler. Another reason is that onshore storage in China is at an all-time high, "so it could mean that in the short term some of these Chinese refiners make use of that storage rather than go to the physical market where prices have skyrocketed," Falakshahi said in a webinar Thursday.

 

Total oil volumes in floating storage, which is defined as a vessel being idle for at least seven days, are around 110 million barrels so far. "Obviously, most of that consists of sanctioned crude, so not everyone can buy that crude. But so you mainly have Iranian and Russian oil in that floating storage," Falakshahi said. He added that the volume of oil on water in the Asia Pacific is also at its highest in the last five to six years.

 

Falakshahi said the base case view is that "this is not a war that can last very long, mainly because it has huge implications for the global energy market". "I think it's really down to how fast they (the US and Israel) can reduce Iran's ability to launch its missiles around the world, around the region, and around the Strait of Hormuz.

Once there is more clarity that this is the case, I think we will gradually see a resumption of the flows around the Strait of Hormuz...," he said. He expects this to lower the risk premium on crude oil prices. "We do think that most of the risk premium is going to be staying over the next two weeks before we see that starting to fade towards late March and beginning of April."

 

He said everything happening in West Asia right now will end up being bearish, whether there is a deal between the US and Iran or if "there's a regime change in a form or another". Crude oil prices will be lower towards the end of the year. Falakshahi also said they now expect US crude oil production to be 200,000 barrels per day higher than their earlier forecast.

 

At 1816 IST, the May Brent crude oil futures contract on the Intercontinental Exchange was $83.33 per barrel, up 2.4%. The April contract of West Texas Intermediate crude on the New York Mercantile Exchange was up 2.9% at $76.84 per barrel.  End

 

US$1 = INR 91.60

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Ashutosh Pati

Edited by Saji George Titus

 

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