The International Energy Agency calls for urgent reopening of the strait of Homuz amid ongoing pressure on global oil supplies
Spot gold prices are up 1.1% at around $4,414.63 per ounce, as market watchers eye US inflation data due out this afternoon.
The July inflation data is expected to shed some light on the Federal Reserve’s policy path and provide some further clarity over whether they could expect a rate hike next month.
A hot print will present Fed chair Kevin Warsh with an early test of his mettle - will he follow up those tough words on inflation with action, or continue to lean on jawboning the market and higher bond yields due to oil/inflation dynamics?
I continue to think the Fed will have to follow through with at least one hike this year as it remains short on the inflation side of its mandate, and it shouldn’t have to worry too much about the employment side, despite those apparently weak payrolls numbers.
Although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.
With an agreement enabling the reopening of Hormuz and unhindered transit through the Bab el-Mandeb Strait still elusive, we have again lowered supply estimates for the rest of the year.
Global oil supply is now forecast to fall by 4.3 mb/d in 2026, to 102 mb/d, as growth of 1.4 mb/d from the Americas only partly offsets losses in the Middle East and Russia.
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