With oil markets nearing the danger zone, a US-Iran deal can’t come soon enough | Heather Stewart

I f a US-Iran deal is about to be reached, three months on from the launch of Donald Trump’s Operation Epic Fury, it will not be a day too soon for oil markets, which are approaching a dangerous tipping point. The cost of a barrel of crude on the spot market – for immediate purchase, effectively – has bounced about $100 since Iran predictably responded to the onslaught from the US and Israel by closing the strait of Hormuz. That price remains well below historic highs, and because it has not surged into the stratosphere, it can look as though markets have settled into an uneasy stasis. Yet beneath the surface, every week that goes by has drawn the energy markets closer to what economists call a “non-linear adjustment”, wonk-speak for chaos. Thus far, several factors have helped to ease potential supply constraints, including a record coordinated release of strategic oil reserves ; rerouting of some Gulf production to pipelines, bypassing the strait of Hormuz; and a rapid fall in imports to China, which some analysts believe may reflect Beijing drawing down stockpiles. But the International Energy Agency (IEA), whose executive director, Fatih Birol, has been sounding the alarm from the start, said last week that oil stocks are being depleted at a record rate . And several analysts have issued warnings in recent weeks that the point may be fast approaching when they drop to crisis levels. …