Last week. Brent +7.82% (+$6.44) Open $83.70 High $90.07 Low $83.33 Close $88.82

Articles

• Weekly EIA Inventory Reports large crude build +17mb

• Coal’s last stand- The Oil Report

• When Convictions Blind Leaders

• US Oil Growth Faces Headwinds as Shale Producers Cut Spending

• US says it can keep naval blockade on Iran ‘indefinitely,’ vows more economic pressure

• Multiple USS Abraham Lincoln sailors have tried to go overboard amid extended deployment, families say

• The Trump administration claims oil is flowing normally again. There’s just one problem

• Huge oil slick hitting Oman’s shoreline as agencies warn of disaster

• Two grain terminals at Russia’s Novorossiysk halt work after Ukrainian attack, sources say

• Diesel desperation is mounting globally

• Qatar LNG Loading Jumps Ahead of Potential Hormuz Reopening

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The one line reality of this oil crisis, in my mind, is this. The tightness in this market gets passed over for Tweets, Truths and soundbites. Reality is a second class citizen.

Regardless, the standing view has been that war tightness is real but is masked by several real factors, and price has remained relatively calm as a result. This week puts names, numbers and dates on the masking. Four things to balance.

1. The SPR is doing the work, and it is running out of road. Commercial crude built 17.42 mb this week. 6.12 mb of that was the SPR paying out, taking the strategic reserve to 298.7 mb. First sub-300 print since 1983. Net of the government barrel, the build is about 9.7 mb,, imports at 7.3 mb/d and up 1.14 mb/d on the week. In-transit barrels becoming tank barrels is normalisation. It is not new supply.

2. Demand is the second buffer, and it now has a date on it. The August IEA cut 2026 by a further 510 kb/d to a 1.6 mb/d decline. The contraction eases from 4.9 mb/d in 2Q26 to 2.8 mb/d in 3Q26, then turns to growth of 580 kb/d in 4Q26. A million and a half barrels a day of consumption has been priced out of existence, and the IEA has that demand coming back in November.

3. The bypass cannot take the load. Petroline moves 7 mb/d across Saudi to Yanbu. Yanbu loads 4.5 mb/d nominal at current record highs, Vortexa put it nearer 3 under wartime conditions, and Aramco takes about 2 mb/d into its own Red Sea refineries before an export cargo sees a berth. The issues is now that the Jazan Red Sea refinery was hit by The Houthis-more below. ADCOP adds 1.5 mb/d to Fujairah with roughly 440 kb/d of genuine spare. The IEA puts the entire bypass ceiling at 3.5 to 5.5 mb/d. A lot less than the headline figures. This is a berth problem, not a pipeline problem, and berths will take years to expand.

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4. And the fourth is the US Energy Secretary, who has a maths problem.

The counting problem

Energy Secretary Chris Wright told us this month that on Sunday alone, over 20 million barrels left the Arabian Gulf region (bullshit). He put the seven-day average through Hormuz at almost 9 mb/d, with another 5-7 mb/d moving by bypass pipeline. Big numbers. Let’s put them beside everybody else’s. Grade A bullshit!

• Chris Wright, US Department of Energy: almost 9 mb/d by sea, 5-7 mb/d by pipe

• Commodity Context: 7 mb/d by sea, 4 mb/d by pipe

• Kpler: 5 mb/d by sea

• EIA Short-Term Energy Outlook, August: 4.9 mb/d through the Strait, 2Q26 average, against 21.6 mb/d in 4Q25

That last one is the EIA. The EIA reports to Wright.

Two caveats before anyone writes in. The STEO figure is a second-quarter average and Wright’s is an August seven-day print, so they are not measuring the same window. And Goldman flag that Persian Gulf export data gets revised upward over time, with dark flows nobody is capturing cleanly. Both of those cut in Wright’s favour.

Neither closes a gap this size. Transits ran 8 to 15 vessels a day in early August against roughly 130 before the war, and traffic hit a three-month low on the 12th. Flows did not double into three-month traffic low.

The bypass claim is the one I would look at hardest. The IEA puts the entire bypass ceiling - Petroline plus ADCOP, everything - at 3.5 to 5.5 mb/d. Wright’s range starts at 5 and tops out at 7. The upper end of his estimate sits above the top of the whole system’s capacity. Brett Erickson at Obsidian Risk Advisors put it plainly: ‘‘there is not a modicum of evidence for the higher numbers.’’

The market traded it anyway. Brent sold off on the 13th on a transit figure nobody outside the administration can reproduce.

The official flow numbers do not reconcile with the tracked ones, and the widest gap is in the bypass, where the physical ceiling is already known.

I am not going to tell you which figure is right. I will tell you which one I am using. Kpler and Vortexa get my barrels. They count boats with satellites.

Bad al Mandeb

Yanbu exports via Bab al Mandeb averaged 3.5mbpd in July have now moved down to a few thousand. Add to this the shutdown of the Jazan refinery, Saudi inventories thus climbed to 75mb in August so far, from 61mb in June. This has served to push all of Saudi exports to move through Suez. An Indian buyer of Saudi crude has to get delivery via Spain and then The Cape of Good Hope. A 40-day leg.

US Inventories bump up

The bulge of the +17mb build really came from a large adjustment up. The adjustment is the EIA's balancing item - the gap between what the tanks say happened and what the measured flows (production, imports, exports, refinery runs) can explain. Tank gauges are a hard count while the flow data is sampled and estimated. A persistently large positive adjustment means barrels are showing up in storage that the surveys never saw arrive - right now, almost certainly imports undercounted as MEG tanker armada lands faster than the weekly sampling catches. The graph below serves a good way for me to rapidly see where the bulk of the WoW changes actually come from. A small element of the internal energy dashboard that I run.

Black sea - We need to talk grains!

Its time to look at the Ags complex. Below and in the trade section, I look at where I think these markets are going- Corn, Wheat, Cocoa. TTF (Euro Gas) also covered as it came up in conversations over the last 2 weeks.

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CORRECTION 14th Aug 8pm. The reference to an armada of Gulf oil landing has been updated below. Imports did indeed jump; however, this was Canada +4.06mb and Venezuela +7.43kb led.

The biggest US crude build in three and a half years! I remember trading many years ago, Feb 2021 - we got a 21 mb build on Co…

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Last week. Brent -9.51% (-$8.66) Open $82.80 High $86.33 Low $78.11 Close $82.38

Articles

• EIA Weekly Report

• Global Oil Exploration Fundamentals 2026

• Yemen’s Houthis attack Saudi refinery after kingdom signs defence pact

• Iran says deal on Strait of Hormuz is close but not enough to open the waterway

• A visual guide to Iran’s coastline and strategic islands

• Mapping the Red Sea attacks - Feb 2026

• Saudi Arabia, Turkey, Pakistan pledge mutual defence as Middle East turmoil escalates

• A deal with Iran over the Strait of Hormuz may require a compromise from Trump

• US nonfarm payrolls unexpectedly decline in July; unemployment rate eases to 4.1%

• President Donald Trump: The 2026 Midterms Interview with Punchbowl News

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If you have not yet had a chance to watch my interview with Patrick Rutty from Enverus, it is well worth a watch. We go in-depth into E&P as it is laid out for 2026 and beyond. It is perhaps the most insightful piece I’ve done to date on where the majors and minnows are acquiring acreage, drilling, and how successful they are on a global scale. A must-watch if you are looking to invest in some oil names in 2026 and 2027. It also feeds into the series I’m doing on ‘Trading the Energy Supercycle’. Okay, now to the report.

A peace deal is far from being struck here, regardless of the talking heads and political murmurings. The Houthis have just attacked Saudi Red Sea refining ports as of Sunday afternoon. Bullish action in the face of bearish political tones.

Let’s focus on The Iran/Oman agreement and the global stocks picture.

According to this draft plan under parliamentary review:

• The passage of vessels belonging to the United States, Israelis and other hostile countries through the Strait of Hormuz will be prohibited.

• Ships related to Israel, whether military or civilian, will not have the right to transit through this area.

• Vessels or cargoes that play a role in actions against the Resistance Front will also be subject to the ban.

• Countries and individuals that have caused damage to Iran will not receive permission to pass through the Strait of Hormuz and the Persian Gulf until compensation is paid.

• Heavy fines, including up to 20% of the value of the goods, will be imposed on violators. The cargo is anticipated.

• The government will be required, in cooperation with the armed forces, to assume responsibilities such as guiding navigation, monitoring vessel traffic, and protecting the security and environment of the Persian Gulf.

• This plan is still in the expert review stage, and the parliament has asked experts to submit their suggestions for completing it.

An informed source in the Foreign Ministry told Fars: According to the framework of the negotiations between Iran and Oman,

• The entry to the Strait of Hormuz is to be carried out through the northern corridor of the strait near the Iranian coast, and the exit of ships will be through the southern corridor near the Oman coast.

• After the specified deadline, the passage of ships through both the northern and southern corridors will be stopped and all traffic will take place through the middle corridor, with the difference that the entry of ships will be managed by Iran and the exit will be jointly managed by Iran and Oman.

• The determined fees for ships to pass through the strait will be determined in the form of various service prices.

• The news that Iran and Oman disagree on the percentage of the value of ships’ cargo [a tariff of 7 or 3 percent of the cargo value] as payment is not true, and the receipts from ships are a function of many variables from Including the amount of services we can provide.

• Insurance, refueling, environmental costs and such are among the services that ships must pay for.

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Red Sea

So it’s no surprise that loadings at Yanbu are ncow redirected almost fully north to Suez.

Runway & EIA data.

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This is an incredible look at who is drilling where, how much, who is leading, who is dominant, who is lagging and where these companies are set to grow drilling, acreage and production. A real gem for those investing in the upstream energy space. A large amount of this will feed into part 3 of my series on ‘Trading the Energy Supercycle’.

I may catch up with Patrick Q4 to see what adjustments may have occurred as the industry looks through to 2027.

Many thanks to Enverus and Patrick Rutty for their insights and research. Full research report PDF below.

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Notable this week

• Commercial Crude: +2.48 MMbbl w/w

• SPR: -2.84 MMbbl w/w

• Cushing: +2.36 MMbbl w/w [notable]

• Gasoline: -1.64 MMbbl w/w

• Distillate: -3.47 MMbbl w/w [notable]

  Some reading for those not aware of ‘The Heartland’ concept. I spoke about this in an interview last week and also wrote about it a few months ago in’ The Heartland’ August 3rd 2025.

  

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Iran’s Foreign Ministry says talks continue on the Strait of Hormuz with Oman. Geographic characteristics have been agreed on. Joint announcement by Oman and Iran is in the final stage, if “certain” 3rd parties do not interfere.

• “The geographical coordinates of the route intended by the parties have been understood, a…

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Articles

• The Oil Report weekly EIA report.

• Saudis Form Military Alliance to Protect Red Sea Shipping

• The Iran and Ukraine wars are colliding on the world’s biggest lake. Here’s what to know

• Iran says it will halt strikes as long as US bombing pause holds

• Yemen’s Houthi Rebels Claim Strike on Saudi Pipeline Infrastructure

• Iran launches missiles at U.S. base for first time since Trump paused strikes

• Oil Startup Backed by Ex-Goldman Commodity Chief Currie to IPO

• China in touch with Yemen's Houthis to allow ships to sail through Red Sea, sources say

• BP puts North Sea oil and gas business up for sale

• OPEC+ likely to pause oil output hikes after September, sources say

• How Asia tech selloff unfolded over DUVs and circular deals

• Japan Backs Overseas Oil Pipelines to Reduce Hormuz Dependence

• Canada advances global energy exports by signing second European LNG deal

• The digital world disruption

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We can take it that the blunt force we have seen from The Houthis have served as a strong warning shot across the US bow. The threat is a most real and present danger to the energy markets. Despite this, price remains contained. So, with initial sparring subdued, talks between Tehran and Washington are continuing in earnest, brokered by Pakistan. Further ‘kinetic events’ and thus short to medium term supply shocks can not be ruled out. With front month prices the nerve ending for this, loadings and transits to and from Yanbu are subject to Houthi attack at any time. The Saudi Petroline (East-West pipeline) can deliver 7mb/d to this port, but Yanbu can only load about 4.5mb/d, with loadings as of July 13th reaching an all-time high of 4.7mb/d.

So we see a picture where, despite now 2 straits going hot, the cap on price is the safety net of the IEA strategic release and the headlines that talks are ongoing. The bulls had a great go at price over the last 3 weeks, and they continue to rule the roost.

The bears are holding on to 3 pillars, 1 is gone, 1 is dwindling and the other is never going to happen. 1. dwindling-The strategic releases are scheduled to grow sharply smaller through August, with 110mb left of strategic reserves. 2. Never going to happen- The last couple of months, despite a lot of effort from all sides, have not yielded any middle ground on talks. A return to talks will be hobbled by the issues of the MOU. 3. Read on below in the China section.

Colliding conflicts

We now get to connect the powers involved on both sides of the two major war fronts happening around the globe. The US, Europe and Israel represent the western axis. Russia, Iran and Yemen represent the eastern axis, with China no doubt to be added soon. On Saturday 26 July, Ukraine struck the Iranian-flagged cargo ship Ana in the Caspian Sea with a long-range drone. One crewman was killed. Zelenskyy said the vessel was moving drones and missiles from Iran to Russia. Iran called it commercial shipping and summoned Ukraine’s chief of mission. Two wars that were being fought separately are now being fought over the same supply line. I think this will serve as the first of many. In my personal opinion, this is a war that will move to global conflict status within 12 months.

Tight

There is a tightness stalking the US crude picture. Refiners are running now at 97.2% efficiency, up from 96% prior. With margins as fat as they are around 70 bucks from a normalised range of about $20 to $30. The latest EIA report flagged a couple of points of evidence. Commercial crude was a 7.17mb draw with Cushing also drawing 4% further. The EIA adjustment reading of residual oil also took a sharp pullback- more in the EIA report here

At the pump

As I have discussed over the last 2 weeks, the concern is now shifting away from front month prices towards refining. Prices are now inflecting back towards the highs seen at the start of this conflict in March/April. We must watch this space, as governments across the world have largely thought that they dealt with this already. I would be concerned that they may not have thought this would need a second bandage. Will we see new highs across Diesel and Petrol? I think we will, and it will come right into harvest time. Despite The US producing higher rates of Diesel, it may not be enough given how decimated the global refinery picture is currently.

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Oh, and there is also this

(China section, The COT deep analysis and Trade section)

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• Commercial Crude: -7.17 MMbbl w/w [notable]

• SPR: -3.80 MMbbl w/w [notable]

• Cushing: -771 kbbl w/w

• Gasoline: +7 kbbl w/w

• Distillate: +1.06 MMbbl w/w

  

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Last week. Brent +11.83% (+$10.44) Open $89.30 High $102 Low $86.12 Close $98.70

• Top U.S. military commander in Middle East advised halting Hormuz bombing

• Every Oil Crisis in Modern History: What Caused Them, What They Cost, and How Governments Responded

• The Suez Canal Crisis of 1956 & The Rise of the US

• OPEC+ likely to again raise oil output targets from September, sources say

• Big Tech Debt Flood Is Taking Over Risk In Market: Credit Weekly

• Is Europe’s gas market inching towards a winter crisis?

• US Goes All-In on Diesel Production Amid Growing Global Shortage

• The U.S. oil reserve is at a 40-year low — but the government says there’s still plenty of breathing room

• China oil market braces for possible August fuel export halt

• Strategic Petroleum Reserve - US Department of Energy

  

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History is playing out right in front of our eyes. The designs of empire are being battle tested across two of the world’s 7 key oil choke points.

The US administration is at war with Iran at the behest of Israeli desires for a greater Israel plan. American lives and taxpayer money are grist for this geostrategic mill.

Trump is now as they say, in too deep. The outcomes from here are becoming increasingly binary. With dwindling military options bar a nuclear strike in Tehran, The US faces pulling out of the Middle East completely. The far reach of Empire is failing, regardless of all attempts to win the war through narrative control. According to Rubio and Vance, this war was over 3 months ago and Iran have zero military capabilities. What complete horseshit! Stating at almost every hot point ‘Iran are desperate to make a deal’ - more bollox. To steal a line from the great Logan Roy (Succession), They are ‘Not serious people’. You can not run around the globe playing Alexander the great, like the world is all for the taking. The mistake here is that it is not.

America is clearly a vassal state to Israel, and there are 1.5trillion dollars to prove it.

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So what’s the trade? Well, I have never seen a more bullish picture for crude oil and energy in my life.

1. Closure of The Straits Of Hormuz & Bab El Mandeb strait

2. 20% IEA OECD coordinated release of 400mb (20% of global stores) coming to an end.

3. We are approaching Autumn, where refiners will only have 1 major buying program phase left in the year - seasonally observed.

4. Russia refining is out about 40-50% and more may fall. Globally, 10% of refining is closed.

5. Demand is tapering in China, but we have not reached traditionally high enough prices to start real demand destruction across the western world - Europe, Americas.

6. The SPR release has successfully sheltered consumer markets from real price impact exposure……. so far. That is about to close in the next 4 weeks. Refiners margins will compress.

This is all known and pricing in right now. Despite the bullishness, I would not chase these highs on Front month futures-read more in the trade section below.

In the last report, I wanted to bring awareness to the refinery situation that is unfolding. Effectively global refining capacity is tight, then we had a massive pullback on price that directly correlated to giving refiners cheaper oil with gang buster demand. Higher prices now, will serve to contain that spread back into its historical range.

The way I see it, it’s like the market has been living off of its SPR savings for the last 6 months. Those savings have taken a serious hit- about 20 to 30%. There are still ample amounts left in the tanks.

The falsifiable test of this is that Iran come back to the negotiations table and call off Ansar Allah (The Houthis). Once we have this confirmed by Iranian negotiation leaders/ political leaders, the bulls have to shift - we will see oil prices crash back down. But until then, we are on the opposite side. Trump is turning up the heat and so is Iran/Ansar Allah.

Diesel - don’t panic!

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There is a real risk to diesel prices at the pump rising again drastically. The crack has gone vertical and it is going to come back down if we hold the $80+ handles on WTI. Do not read that as the problem going away though. Here is what actually happened. When we slid down on price in the MOU phase, refiners were buying crude cheap and still selling product at the pump for the same money as before. That is a golden run, and their margins showed it. Now crude has come back up and the run is over. Think oil up, margins down, oil down, margins up - easy.

The thing to watch is what is floating. Crude on water is at a record high.

-Continue reading for product dynamics, The SPR flow problems, The Net Net, COT positioning on oil and Trade Section.

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World Energy Investment 2026

• Coal supply investment hits $180bn in 2026, the highest since 2012, up 4% on last year

• China and India are writing most of the checks, but the checks are real and they’re growing

• Coking coal has its own steel-driven bid that has nothing to do with anyone’s energy security panic

• Everyone declared coal dead around 2015. Coal didn’t get the memo

Coal has been the fossil fuel equivalent of the guy nobody invites to the party but who somehow shows up anyway with better wine than everyone else. Every energy transition slide deck since 2015 has had the same chart: coal in terminal decline, the dirty fuel on its way out, replaced by cleaner everything. Meanwhile, in 2026, more money is going into digging coal out of the ground than in any year since 2012. Someone forgot to tell the money.

The Number Nobody’s Talking About

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Notable this week

• - Commercial Crude: +2.01 MMbbl w/w

• - SPR: -5.06 MMbbl w/w [OUTSIZED]

• - Cushing: -674 kbbl w/w

• - Gasoline: +765 kbbl w/w

• - Distillate: +1.40 MMbbl w/w

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read on for breakdowns on The call, Chart of the week, production, products, imports & exports and refinbery and demand.

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EIA report - Week ending Jul 10, 2026 Released: 15th July 2026

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Last week. Brent 17.34% ($13.04) Open $78.00 High $88.38 Low $77.28 Close $88.26

Articles

• Yemen’s Houthis declare naval blockade against Saudi Arabia

• Video: Global Economy in Peril If Hormuz Crisis Persists, Warns IEA Chief

• Europe Faces Diesel Crunch as Inventories Head Toward Multi-Year Lows

• Could the US take control of Iran’s southern islands?

• Iran war live: US military completes ninth night of strikes on Iran

• U.S. Backs Iraq-Syria Oil Pipeline to Bypass the Strait of Hormuz

• Trump tells Netanyahu to move forces out of Syria and Lebanon

• Khamenei’s advisor threatens full-scale offensive if US attacks continue

• Burnham to announce plans for new North Sea oil and gas drilling

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A second round of hot war has duly become a tailwind for upside on oil prices since last week. What has perhaps been hiding in plain sight is the rally in refiners margins. Pre-war, the refiners profit range was $20 to $27. It is now trading at $63. The last time refining margins looked like this, Russia had just invaded Ukraine and Europe was scrambling for diesel. That was the record. We have never been at refiners margins this high.

Nine percent of global capacity is out across the Gulf, Russia and China, on top of the 9.7 Mb/d the industry had already closed since 2019. The refining margin has tripled. That gap is what the consumer pays.

Adding fuel to the fire, The Houthis just announced they are enforcing a naval blockade on Saudi Arabia. They are an Iranian backed political and military group from Yemen. They are the small and nimble nightmare that The US navy will now have to deal with on one major front, The Bab al-Mandeb Strait (BAB). Roughly 7% (7mb/d) of global oil output transited BAB in June.

The war now has two naval fronts, where The US navy will have to maintain safe passage across The entire Arabian Peninsula, an approximately 3000 km-5000km stretch. 8

Refining

The refining margin has never been higher in 24 years of data.

‘‘The reduction in crude throughput has cut fuel production by about 10%,” - Natasha Kaneva, head of global commodities research at JPMorgan. “The question now is not when crude supply will resume, but how quickly the global refining system can process crude oil.” According to JPMorgan’s tally, global refining throughput has fallen by 8.4 million barrels per day compared to pre-Iran war levels.

Industrial Info Resources, whose plant-level database is the source of record for refinery outages globally, has Kuwait’s Mina Abdullah still under shutdown - 454 kb/d, dark since March. Mina Al-Ahmadi at 346 kb/d and Al-Zour at 615 kb/d are both running at reduced capacity. In Bahrain, drone attacks caused severe damage to the diesel hydrotreater at Sitra Refinery and restart is not expected until November. Qatar shut Ras Laffan as a precaution in Q2, and it is still at reduced throughput. Iran has attacked 30 refining facilities across the Middle East during the war, according to JPMorgan, covering a region that holds 11.7 mb/d of crude refining capacity. Normalisation, JPMorgan notes, will be difficult without restoration of crude supply chains.

Russia is the variable the market is not watching. Ukraine has struck 19 Russian refining facilities over the past two months, with a combined processing capacity of 4.9 mb/d. Russia’s diesel production has fallen by roughly a third. Russia was the world’s second-largest diesel exporter before any of this happened, moving 800 kb/d a day, about 12% of global diesel exports, according to Lipow Oil Associates. That is now under an export ban.

JPMorgan puts Russia at one fifth of the world’s total lost refining throughput. You will see 70%-80% of capacity struck cited as a figure. That measures sites hit, not sites down. The number that does not get quoted is China. JPMorgan has 3 mb/d switched off there and not a single drone was involved. Beijing ramped coal, pushed EVs, drew down reserves and cut the gasoline and diesel it had been exporting to Southeast Asia.

“While it is understandable that the market’s attention is focused on Hormuz,” JPMorgan’s Natasha Kaneva said, “one of the most important variables determining global refining supply and demand may now lie nearly 2,000 miles to the north.” The industry came into this year having already closed 9.69 mb/d since 2019. The last significant refinery built in the United States was Garyville, Louisiana, in 1977. There was nothing in reserve.

China

Read below for where China are in their return to the markets and prices at the pumps in EU and US.

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• Commercial Crude: -1.69 MMbbl w/w

• SPR: -2.98 MMbbl w/w [notable]

• Cushing: +430 kbbl w/w

• Gasoline: -1.53 MMbbl w/w

• Distillate: +4.56 MMbbl w/w [notable]

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Prior machine learning price projection model report Glut 2.0 here.

Last week’s EIA full analysis report here

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In this report: We look at Several elements of pricing in the market and how China can turn this entire book on its head.

Last week. Brent +4.46% ($3.05) Open $68.68 High $76.08 Low $67.82 Close $71.51

Articles

• U.S. and Iran trade strikes after IRGC declares Strait of Hormuz “closed”

• Traffic through Strait of Hormuz halves days after US strikes in blow to global economy

• Ships pass through Strait of Hormuz in secret as US and Iran trade strikes

• US pain at the pump worsens after more US-Iran fighting lifts oil prices

• From Hormuz to the pump: Why oil price shocks hit consumers differently

• China’s Oil Imports Poised to Recover as Stockpiling Returns

• Why the real oil shock may only begin when China returns

• Ukraine Hits All 11 of Russia’s Largest Oil Refineries in Long-Range Drone Campaign

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There are 4 key factors in the oil landscape currently that need to be understood. It is my view that price action is on a knife edge at the moment. Does this renewed closure of the straight actually impact price the way we think it should….Up? Or is this new closure going to actually have far less impact than the first, if any? Is it that simple? This is not even accounting for how hard Russia is getting hit at the moment from Ukraine. Read below for a Russian brief.

Here they are and here is what we have to balance. Welcome to oil!

1. The MOU is dead and The SOH is closed again with a US blockade. Traffic is reduced to 52% WoW-source: Kplr.

2. Easing of supply is real across the global network, with local MENA region remedies, OECD strategic releases, but we are also seeing large builds of stores in the South Atlantic market from Brazil and West Africa. These add to the overall SOH relief.

   

3. Price reaction is limited and controlled. The reaction to a new closure has been bid up but limited in scale. We will need a new catalyst and extended closure time, to reaccelerate up. The US blockade that comes into force on Monday has found some strong volumes of buying. However, this was met with limited upside as of 5pm GMT.

   

4. Tightness continues to haunt the landscape with strategic reserves masking the shit show. Inventories thus continue to be propped up. The mini glut we currently see, is largely down to this and two other factors. 1. Chinas withdrawal from the import scene with Chinese refining maintenance runs a small factor. 2. A wave of relief ships laden with oil exited The SOH over the last 3 weeks. More in China section below.

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WE ARE 69.5MB OFF THE SPR FLOOR

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China

China quietly cut its crude imports to 5mb/d since Feb, close to half of what it was buying before. The barrels that then left Hormuz heading east started to pile up at refiners who were not taking them.

Shandong teapots ran at 50.5% in late May, a nine-year low; the national average was 66.3%; May processing fell 9.1% year over year. The reasons are expensive crude, crushed refining margins, weak fuel demand, the fuel-export ban - and, importantly, EV adoption accelerating once oil pushed above $100

-read on for full China picture, Russian read, MEG pricing impacts, The COT analysis and trade charts and analysis.

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