Only one-third of normal ship traffic is currently moving through the Strait of Hormuz — yet oil prices are barely reacting, a situation described as anomalous by Prof. Steve Hanke.
"I don't know why traders are just expecting not only the war to have ended, but oil to just flow out of the Strait of Hormuz at the same numbers as it did before the war. But that's just not happening. Today, in the last 24 hours, only 39 ships in total went through the Straits, about a third of what it would be, even less than a third of what it was before the war. So reality is just so disconnected from what the markets are telling us. It's just weird for everybody, different people have different explanations. I have no explanation except to say that we know this is anomalous, and we can go back to all this academic and as well as industry studies that have been done relating the forward-curved inventories, and if inventories are low, which they are now, we know that. That's something we know. You find the price structure should be one in which you observe spot prices above futures prices by a considerable level. They are a little bit now, but not very much. You should be seeing quite a bit of backwardation in there for Brent, and you're not."
💬 Discussion
Only one-third of normal ship traffic is currently moving through the Strait of Hormuz — yet oil prices are barely reacting, a situation described as anomalous by Prof. Steve Hanke.