Oil Market Less Volatile Despite Geopolitical Risks: Platts

There is sufficient oil in the market and spare capacity that geopolitical crises are not causing additional price volatility, Platts said in its Oil Market Podcast.

• The 5m bbl of spare capacity – mainly held by likes of Saudi Arabia and the UAE - has been a reassuring cushion for the market during a febrile geopolitical atmosphere.
• Traders don’t seem to be overfully concerned by risks of conflagration with Iran threatening the Straits of Hormuz, Platts said.
• Iran is unlikely to want to perturb its own customers, namely China, by escalating a conflict that could throttle its own exports.
• However, this inertia may not be maintained if OPEC output cut unwinding goes ahead as planned approaching Northern Hemisphere winter, typically a weaker period for oil demand, Platts added.
• These additional barrels, in the face of sluggish demand, could have a notable bearish move on price levels.