Oil: Tight Supply Market Keeps Brent Elevated – TD Securities

Brent crude is currently trading at $90.86 per barrel, with bullish sentiment in the market continuing to be bolstered by supply-side disruptions. TD Securities' commodity strategy team maintains a bullish view on crude oil, with the core logic being that the tight supply landscape is unlikely to ease in the near term, alongside escalating tensions in the Strait of Hormuz.

**Plunging Strait of Hormuz Shipping Lifts Supply Risk Premium**

According to reports, shipping activity through the Strait of Hormuz has contracted sharply recently—the number of vessels transiting the strait over the past weekend nearly fell to zero, with only five commodity ships passing on Saturday and none at all on Sunday, compared with 31 vessels during the previous weekend. Meanwhile, attacks on tankers owned by Abu Dhabi National Oil Company and strikes on Saudi Aramco refineries have sharply deteriorated the geopolitical situation. Gulf oil producers are reportedly now covertly shipping oil through the strait at roughly half of pre-war flow levels, significantly heightening supply gap pressures.

**Sanctions Expectations Reinforce Bullish Thesis**

On the sanctions front, U.S. Treasury Secretary Scott Bessent signaled that Washington plans to impose a new round of sanctions on Iran as early as next week, with the market expecting this to further compress Iran's crude export capacity and provide additional support for oil prices. The failure to reach a formal agreement between the U.S. and Iran after the expiry of the 60-day ceasefire period has also kept the geopolitical risk premium elevated.

**TD Securities: Tight Supply Landscape Supports Oil Price Center**

TD Securities' commodity strategy team believes that the aforementioned multiple supply-side pressures, combined with geopolitical uncertainty, constitute the core driver for Brent crude maintaining elevated levels. Until supply risks show substantive easing, the firm's bullish stance on crude oil is expected to persist.