Brent's Stability Masked: Supply Disruptions and Weaker Demand

The Brent crude oil price has remained relatively stable around $110 per barrel despite significant supply disruptions in major Gulf regions. Dr. Hamad Kasasbeh notes that while the supply disruption appears substantial, the market is temporarily distributing its cost across weaker demand, declining inventories, rerouted barrels, and higher transport and insurance expenses.

The International Energy Agency expects a 5.7 million barrel per day decrease in global oil supply by 2026, with over 10 million barrels per day of Gulf production offline in August. However, the market does not price the scale of disruption alone but rather the volume of oil that actually disappears from buyers' reach.

Global oil demand is expected to decline by around 2.5 million barrels per day in 2026, with notable weakness in Asia. This helps explain Brent's relative stability as the market faces less supply and less aggressive demand.

Inventories have bought the market time, falling by approximately 507 million barrels since February, including a significant 95 million barrel drop in August alone. The cushion erodes with every additional withdrawal, ultimately reducing the safety margin against future disruptions.