StanChart Warns Oil Is Now Built for Sharper, More Frequent Spikes
Oil surged toward $110 a barrel on Thursday—the highest since July—after escalating incidents in the Strait of Hormuz and growing signs the US-Iran confrontation will not end soon. Standard Chartered warns that headline-driven volatility is likely to persist through the third quarter, with refined fuels particularly exposed to sharper, more frequent price spikes.
Why It Matters
With reduced spare capacity, lower inventories and constrained logistics, markets are increasingly exposed to asymmetric upside risk, meaning supply disruptions can push fuel and gas prices far higher and faster than in the past. That elevated tail-risk raises costs and complicates planning for consumers, refiners and policymakers.
Key Facts
- Oil price peak: Nearly $110 per barrel on Thursday (first time since July)
- IRGC claims: Attacked and heavily damaged eight oil tankers and two U.S. Navy destroyers in the Strait of Hormuz
- CENTCOM response: Denied the IRGC claims
- U.S. political comment: President Trump said the war is unlikely to end before the midterm elections; advisors warned it could last the rest of his term
- Brent and WTI (Friday 7:10 a.m. ET): Brent $103.58, WTI just over $98
Oil markets surged after renewed violence and heightened tensions around the Strait of Hormuz, pushing prices to their highest levels since July. Iranian Revolutionary Guard Corps statements that they struck multiple tankers and U.S. destroyers—claims CENTCOM has refuted—added to the sense of risk. Political signals that a near-term end to the conflict is unlikely have further dimmed hopes for a quick de-escalation.
Analysts at Standard Chartered say the market is already showing the effects: middle distillates such as diesel, gasoil and jet fuel are significantly stronger than gasoline, with some trading venues under severe stress because of weather, logistical bottlenecks and tight physical balances. The bank expects these strength patterns in product cracks to persist, with some of the pressure extending into longer-dated contracts as participants price in a protracted standoff.
Standard Chartered also highlights growing flexibility from China, whose recovering crude imports and ability to redirect refined product flows are an important offset to strained global trade patterns. Still, the bank warns that spare capacity, inventories and logistics buffers are thinner than before, so when multiple disruptions coincide the market has less scope to absorb shocks. That dynamic, the bank argues, makes price moves more asymmetric: rallies may be brought down later, but upside spikes are becoming both sharper and more frequent.
The European gas picture is also tightening. Natural gas prices in Europe rose above €81/MWh—levels not seen since December 2022—partly linked to the Middle East disruptions. Qatar has shown signs of testing Hormuz transits, with a Qatar-loaded LNG carrier transiting on September 8th and some vessels returning to the Gulf, but QatarEnergy has extended force majeure on some deliveries into October and November and is operating at reduced rates. European storage sits at 66% of capacity, 12 percentage points below last year and at a 15-year low for this time of year, with major economies like Germany (54%) and the Netherlands (48%) most exposed; analysts warn Germany could face a large peak-day gap if winter is colder than expected.
Standard Chartered projects that, despite the current turmoil, oil could average $77.50 a barrel in 2027 assuming demand recovery and the need to refill and expand strategic reserves. In the near term, however, the bank and market participants at the Asia Pacific Petroleum Conference concluded that headline-driven volatility and the risk of sudden supply shocks are likely to keep energy markets on edge.
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