Oil Prices Keep Rising Despite Plenty of Supply. JPMorgan Explains Why
The world has a lot of oil. Yet costs hold climbing, and JPMorgan says the issue is now at sea. There are just too few obtainable tankers to maneuver all that crude.
In an October 9 notice, the financial institution warned {that a} delivery bottleneck is driving up transport prices, whilst Middle Eastern producers enhance exports.
Oil shipments by way of the Strait of Hormuz reached 12 million barrels a day in September, up from 7.5 million in July and August. Yet costs stay high.
The World’s Oil Tankers Are Running Out of Capacity
According to JPMorgan, 766 of the world’s 923 supertankers had been already in use by September. Another 124 Iranian vessels are largely inaccessible to mainstream delivery as a result of of US sanctions.
The remaining ships face longer journeys, whereas transferring oil between vessels can take as much as 10 days.
Consequently, transferring Middle Eastern crude now requires 35 extra supertankers than the 2025 common, excluding Iranian shipments.
“In April, the issue was a scarcity of crude. In October, it’s the value of transferring it,” JPMorgan analysts Natasha Kaneva, Lyuba Savinova, and Artem Fakhretdinov wrote.
One Oil Tanker Now Costs $1.16 Million a Day
The scarcity is already hitting freight markets.
On October 7, a supertanker heading to South Korea was employed for $1.162 million per day, in keeping with Seatrade.
Meanwhile, Brent crude traded close to $102.77 on October 9, whereas US crude reached roughly $93.13.
Higher delivery prices are squeezing refiners, too. JPMorgan warned that European refining margins are turning unfavourable, probably forcing some amenities to scale back manufacturing.
Can More Oil Actually Bring Prices Down?
Earlier this month, G7 nations agreed to release 100 million barrels from emergency reserves.
President Donald Trump additionally claimed the Strait of Hormuz not drives gasoline costs.
However, JPMorgan’s findings elevate an even bigger query: What occurs when governments launch extra oil than obtainable ships can effectively transport?
For traders, delivery capability is turning into more and more vital. Tanker-focused investments have already drawn consideration amid the disruption.
Until delivery prices ease, further crude provides could provide restricted aid to patrons.
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