Oil Market Update - Strait Of Hormuz Reopens On June 19?

When does the deficit get resolved? What are the assumptions? Is it too late for oil inventories in the West?

I am happy that we can finally start modeling out some clarity in the oil market. MOU on, MOU off was starting to get rather tiresome with the entire oil market swinging back and forth on the conflict rather than the inventory draws.

In this piece, we will use a June 19 reopening as a base case for what the oil market looks like.

June 19 Reopening

Media outlets are reporting that on June 19th, Iran and the US will sign an MOU to start discussions on the various points. The MOU has not been published, and we do not know if there will be “toll-like mechanisms” attached to the reopening.

From my standpoint, it appears that the signing by June 19 is a test to see whether Israel can actually pull its forces away from Lebanon. That’s an entirely separate discussion that will not be covered here.

Instead, we will just look at the oil math on a June 19 reopening.

So where do we stand?