The opinions expressed here are those of the author, a columnist for Reuters.

By Ron Bousso

July 2 (Reuters) -

Breaking down what matters today in global energy markets

By Ron Bousso, ROI Energy Columnist

An eerie calm has settled in the energy markets as traders assess the uncertainty surrounding ship traffic through the Strait of Hormuz. Following months of extreme scarcity during the conflict, the market today faces a mini-glut.

Middle East oil is flooding the global market since the U.S.-Iran interim peace deal was signed on June 17. Saudi Arabia has resumed loadings from the Ras Tanura oil terminal, the world’s largest, after a four-month halt, while oil from the United Arab Emirates is landing in Nigeria for the first time.

Oil prices continued to tumble, hitting $70 a barrel on Thursday, their lowest since before the start of the Iran war on February 28.

But there is a niggling fear that the status quo is creating a false sense of security.

Iran appears determined to win international recognition of its control over the Strait of Hormuz, even if it has to do so by force, senior sources told Reuters. Tehran also plans to resume levying fees on ships entering and leaving the Gulf if no permanent peace deal is reached after the 60-day negotiation period.

A permanent peace deal certainly doesn’t look like it’s forthcoming. Iranian and U.S. officials concluded a round of indirect talks in Qatar on Wednesday with no sign they had made headway toward a lasting deal, focusing instead on ‌issues that they said had already been resolved in the interim agreement.

For now, the sides appear happy to maintain the status quo around Hormuz without rekindling the war, even if localised flare-ups take place. But that balance may change once the U.S. midterm elections in November are over, Joachim Klement, an investment strategist for Panmure Liberum, wrote in an ROI column.

Away from the Middle East, the Ukraine crisis is also simmering. Waves of Ukrainian drone attacks on Russian energy infrastructure in recent months have led to severe fuel shortages in the country, which could force President Vladimir Putin to ban exports of diesel. This could create a big headache for oil markets. More on this in my latest column.

In other news:

• ROI Energy Transition Columnist Gavin Maguire reviewed the latest data dump from the Energy Institute, which revealed a system pulling in multiple directions — geographically, technologically and structurally.

• Miners of coking coal in top exporter Australia face the dilemma of balancing expectations of strong demand growth from top buyer India against a royalty tax system they view as rapacious and punishing to investment, wrote ROI Asia Commodities Columnist Clyde Russell.

As ever, don’t hesitate to contact me at ron.bousso@thomsonreuters.com or follow me on LinkedIn with any questions or thoughts.

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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