Oil market on the brink: Traders warn of sharp price spike by summer

The global oil market is approaching a critical point that could lead to a sharp rise in prices in the coming weeks. This is reported by the Financial Times, citing traders and industry analysts.

The main reason cited is the blockade of the Strait of Hormuz — one of the key oil supply routes. According to market participants' estimates, if the situation does not change, global fuel reserves could significantly decrease by the end of May.

Additional concern was sparked by a statement from Donald Trump, who suggested that the blockade could last for months. This has heightened expectations of a larger-scale conflict and increased pressure on the market.

Experts warn: by June, reserves of crude oil, gasoline, diesel, and aviation fuel could reach critically low levels. Frédéric Lasserre, head of research at Gunvor, stated that the "turning point" will occur as early as June, and the consequences will be painful for the global economy, which will be forced to reduce fuel consumption.

Amrita Sen, founder of the consulting firm Energy Aspects, also noted that if the current situation persists until the end of June, reserves could be virtually exhausted.

Analysts agree that the further development of the crisis will directly determine price dynamics. In the event of a prolonged conflict, the market could face a sharp jump in energy costs and a new wave of inflationary pressure worldwide.

What this means for Cyprus

For Cyprus, a possible spike in oil prices carries direct economic risks. The country is almost entirely dependent on fuel imports, so any fluctuations in the global market are quickly reflected in the domestic economy.

First of all, gasoline and diesel prices will rise. This will lead to an increase in the cost of transport, logistics and, as a result, most goods and services. The increase in electricity costs could be particularly sensitive, as a significant portion of generation on the island is still linked to petroleum products.

Additional pressure will arise on inflation, which is already showing growth. An increase in household expenses will reduce purchasing power, and businesses will face rising operating costs.

The tourism sector — one of the key sectors for the Cypriot economy — could also feel the consequences. The increase in the cost of air travel and services could affect the flow of tourists, especially from European countries.

In the short term, the government may be forced to consider support measures, such as reducing fuel taxes or subsidies, but their effect will be limited in a long-term crisis.

Thus, prolonged instability in the oil market could become a serious challenge for the Cypriot economy, strengthening inflation and slowing economic growth.