Macro Voices

MacroVoices #539 Rory Johnston: Hormuz Crisis, is it Really Over?

58 min

Rory Johnston of Commodity Context analyzes the dramatic unwind of the Strait of Hormuz crisis, explaining that while a surge of oil flows has created a temporary crude glut and contango, refined product markets remain extremely tight with record crack spreads. He argues the crude price collapse is driven by forced flows from floating storage and a lack of Chinese buying, not a sustainable resolution, and warns that the geopolitical standoff over control of the strait is far from over.

Summarized by Podsumo

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✨ Key Takeaways

1

Crude oil is in a temporary spot surplus with prompt contango, but refined product markets (gasoline, diesel) are extremely tight with crack spreads near all-time highs.
2

China cut crude imports by 5 million barrels per day during the crisis, a massive discretionary swing that allowed other Asian importers to maintain supply.
3

Despite the surge of oil out of Hormuz, loadings lag at 5-6 million barrels/day vs. exits of 12 million b/d, suggesting the mini-glut is short-lived.
4

Iran appears unable to enforce its claimed control over Hormuz, as tankers use southern routes outside its toll system, leading to intermittent kinetic escalation.
5

Speculator short positioning in crude is near all-time lows, setting up a potential $10-20/bbl squeeze on any bullish catalyst.

💬 Notable Quotes

"If you had asked me, Hormuz has been closed for four months, it's June, will Brent DFLs be in contango? I'd be like, 'You're an insane person.' But markets have a funny way of surprising us, and that's what we're seeing in the data. — Rory Johnston"
"The longer people run around Iran, the more bold others will be. If they can't assert control in these early weeks, it's going to be exponentially harder to do so later. — Rory Johnston"
"Both sides want this to wind down, but the problem is they want it to wind down on their terms. — Rory Johnston"