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Higher Hormuz Oil Flows May Offset Supply Risks From Russia-Ukraine Strikes, Macquarie Says

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Russia-Ukraine energy strikes show little sign of easing, but rising Hormuz oil flows could ease supply pressure and slow inventory draws, Macquarie energy strategist Walt Chancellor said in a Monday note.

US President Donald Trump said Russia and Ukraine had agreed last Monday to stop attacking energy targets, briefly sending crude prices lower. Chancellor said subsequent strikes, including attacks near Moscow, offered little evidence of a lasting agreement.

Chancellor said Ukraine's attacks on energy infrastructure highlight the strategic value of such assets, pointing to the Caspian Pipeline Consortium terminal in Novorossiysk. The terminal handles mostly Kazakh crude, while US companies, particularly Chevron (CVX), have invested heavily in Kazakhstan's upstream sector.

Markets should not dismiss US statements on Middle East oil supplies as dark transits limit visibility into regional flows, Chancellor said. Hormuz shipments have risen above 8.5 million barrels per day since Aug. 30 and may have reached 10 million b/d by Sept. 18.

He said additional flows could eventually halt global inventory draws, with 2 million b/d from Fujairah and another 2 million b/d to 4 million b/d potentially moving through the Red Sea.

The higher oil flows also come with tighter shipping conditions, as Hormuz and Red Sea routes, longer voyages, US exports, Panama restrictions, and sanctions lift VLCC rates and vessel values while widening regional oil price differences, Chancellor said.

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