The physical oil market is exhibiting signs of severe weakness, with conditions deteriorating to levels not seen since the demand collapse during the pandemic.
Industry analysis indicates that the global oil market is entering a period of intense volatility, driven by a surge in Middle Eastern exports following the reopening of the Strait of Hormuz.
This influx of supply has rekindled fears of a global glut, pushing crude prices down to pre-war levels.
The market is currently repricing the risk of oversupply, overshadowing earlier concerns about supply disruptions from Gulf hostilities.
Traders are reacting to the tangible increase in available barrels, which has shifted the balance of power back toward buyers.
The shift in market dynamics has had broader implications, with global bond markets plunging amid the renewed hostilities in the Gulf region.