Pressure on the oil market is mounting

An oil supply gap has reopened ...

The framework agreement between the US and Iran only brought temporary calm. Fighting has flared up again and the Strait of Hormuz, through which around one fifth of global oil supplies were transported before the war, is largely blocked. As a result, the price of a barrel of Brent has risen by USD 30 to most recently USD 100 per barrel.

... but inventories still provide a buffer

Even higher oil prices have been prevented in recent months by the oil market proving surprisingly adaptable. The missing oil from the Gulf region amounting to around 20 million barrels per day (including oil products) has only had to be partially offset by drawing on inventories. OECD countries’ stocks have fallen from around 4.1 billion barrels at the end of February to just 3.9 billion barrels at the end of May. The OECD countries thus still have a fairly comfortable buffer. We confirm our previous assessment (see here) that stocks will last roughly until the middle of next year.

Higher production, ...

So far, relief has been provided by the fact that production outside the Gulf region (above all in the US, Brazil and Kazakhstan) has been ramped up. According to the IEA, it averaged 1.3 million barrels per day higher between March and May than in February.

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