Oil producers risk complete asset devaluation from shipping blockades, making crude worthless at its origin, says Sparta Commodities' June Goh. She highlights the need for alternative routes and infrastructure to survive maritime disruptions.

Oil producers stranded without shipping routes face complete asset devaluation as regional supply bottlenecks intensify, making crude effectively worthless at the point of origin, said a senior oil market analyst at Sparta Commodities, June Goh.

Speaking to ANI, she stated that blockades along Starit of Hormuz leave suppliers with zero monetary value unless alternative transit solutions are established. "...If you cannot get your oil out, the oil is worthless in their fields, essentially. So these producers, they have to find a way to still generate revenue by getting a more difficult route out, as you say, or a more ingenious route to then facilitate revenue coming back to the country," Goh said.

Infrastructure and New Suppliers Key to Survival

Goh pointed out that structural investments remain key to surviving persistent maritime disruptions and maintaining trade flows. "We invest in infrastructure to enable us not to depend entirely on one way of getting crude out to the market. For the rest of the players in the market, I think we also came out stronger than expected because we had Russia... And even now, after the sanction waiver has lapsed, India is still a big buyer of Russian oil. And I think many Asian countries, who are not so afraid of the US sanctions, will also step in because there is really an available stream of oil, which was not thought of or tapped upon at the onset of the crisis...," Goh told ANI.

Brent Crude's 'Roller Coaster Ride'

She noted that global benchmark crude prices experienced steep volatility throughout the period, swinging between projections of oversupply and immediate physical constraints. "Brent really got a roller coaster ride this year. I think when we started before the war, the narrative was the world is super long oil. There's going to be a glut. And people were projecting $50 per barrel oil then. And then when the Strait of Hormuz was closed, starting from when the war broke out on the 28th of February, we quickly moved into a supply constraint..." Goh stated.

Geopolitical Tensions Continue to Drive Prices

She noted that geopolitical friction continues to drive active market pricing, leaving overall market impacts only partially accounted for. "Today, we are back to an escalatory scenario. In fact, I would say it feels almost the same as when we started the war back in March, where both sides are hitting each other, tit-for-tat kind of retaliation. And the oil price is currently $96 per barrel, as I saw, is going up in a direction similar to the previous one, but not as much of a shock as it was before.... So, a very long story short, I think we haven't priced this in entirely yet," Goh added. (ANI)

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