via WSB:
Oil Traders are so caught up in the headlines they’ve lost track of the 8-Ball. Asian floating inventories have fallen from 102 million barrels 3 weeks ago to just under 42 million barrels today.
That is 60 million barrels less in 25 days. A loss rate of 2.4 million barrels a day. At this rate of decline Asian floating inventories will be depleted in 17 days.
Even if the Straits of Hormuz opened today it would take vessels 20-30 days transit time to reach Asia. What we are looking at is a heavily localized short term supply crunch. There is virtually no world where the straits actually open today, the reality is our best case scenario is 2-3 weeks. Followed by weeks of uncertainty as traffic slowly resumes.
My price target for oil remains $150 a barrel in April. Asian buyers will be outbidding every other buyer in the world, desperate to hedge against the possible shortages. This will trickle its way first through Brent Crude (BNO) and then West Texas (USO) to a lesser degree and over a longer time frame.
The reality is $150 a barrel is not hype it’s baked into the scramble and the delays from Hormuz mean there is zero short-term relief.