I’ll try to make your life as easy as possible with this article. There’s a lot of information out there, and I don’t want to waste your time.
For those of you who want a deep dive into the macro oil thesis, I recommend you read the two-part publication by Jon Costello, head of research for HFIR:
(Public) The Oil Shortage The Market Is Still Underpricing, Part I
The Oil Shortage The Market Is Still Underpricing, Part II
Here’s a brief recap of the oil math:
Draws are currently concentrated in oil-on-water and China onshore crude inventories.
Global product inventories remain low and are drawing counterseasonally.
OECD crude inventories are seeing builds but will reverse to draws.
Oman Lane is transiting ~5 million b/d of crude, or 2.5 VLCCs a day.
The global oil deficit is clocked at ~3 million b/d, with visible oil inventories drawing ~1.5 million b/d.
On the geopolitical side, I have argued the following:
We are at a turning point. Maximum political pressure could be applied today if Iran escalates.
Oman Lane transits remain an issue for the Iranians as the ~5 million b/d of crude flow is dampening the potential crude draws.
Either Iran can escalate the Oman Lane (more tanker attacks) or it can escalate to Fujairah.
UAE announced yesterday that it is cutting off all diplomatic ties and trade relations with Iran. It’s now or never.