Very skeptical on Oman-Iran deal regarding the Strait of Hormuz, says Energy Aspects' Amrita Sen
Speakers
Amrita Sen
— Director of Research, Energy Aspects
Brian Sullivan
— Anchor, CNBC (Last Call / Power Lunch)
Summary
Amrita Sen of Energy Aspects discusses the Omani foreign ministry's statement about a possible temporary corridor for the Strait of Hormuz. She is very skeptical, arguing the announcement lacks specifics and that the crude oil selloff is algorithmic and liquidity-driven rather than based on fundamental improvement in flows. She stresses that physical tightness is most visible in refined products, with diesel and heating oil cracks at historic extremes.
- Oman announced hope for a temporary Hormuz corridor, but Amrita Sen sees no specifics and no reason to trust it.
- She says prior Iran-Oman framework chatter produced nothing.
- Crude oil selling after the headline is blamed on thin liquidity and algorithmic trading.
- US sanctions were weaker than some expected, adding to downward oil pressure.
- Refined product markets show extreme tightness, with diesel/heating oil cracks historically high.
- Ongoing attacks in Hormuz and Bab al-Mandab keep physical oil flows at risk.
Ideas
Crude selloff is algorithmic, not fundamental
Amrita Sen is very skeptical of the Oman-Iran announcement for a temporary Strait of Hormuz corridor because it has no specifics and similar prior chatter came to nothing. She argues the crude oil selloff is being amplified by thin liquidity and algorithmic headline reading, not by fundamental confidence that Hormuz oil flows are about to resume safely, especially after another overnight attack.
Refined products show record crack tightness
The real physical tightness is showing up in refined product markets rather than crude. Gasoline and diesel are exceptionally strong, and the diesel crack is historically higher than crude while the heating oil crack has traded above $100, implying flat heating oil prices around $190-200. This is the part of the oil complex that ultimately drives consumer prices.
