Oil Prices Remain Below Wartime Peaks as Global Demand Plummets

Oil prices have failed to reach their wartime peaks despite ongoing conflicts in the Middle East. Global oil demand has plummeted, falling by a staggering 11.1 million barrels per day since late February. This represents a 10% drop in global demand, with inventories at record lows, according to JPMorgan strategists led by Natasha Kaneva.

The US-Iran war and attacks on shipping through the Strait of Hormuz have severely impacted oil supply, but prices remain $20 below their April and May highs. Brent crude futures are currently trading around $101 per barrel, while WTI crude is at $92.

According to JPMorgan, demand has fallen faster than in any year except 2020, when the pandemic led to a significant downturn in global oil consumption. The International Energy Agency forecasts a 1 million barrel per day decline in demand this year, a significant change from their May report which predicted only a 420,000 barrel per day drop.

The strategists attribute the market's rebalancing to demand destruction, rather than a depletion of inventories. They suggest that some countries may be releasing barrels from unknown reserves, with China being the largest suspect due to its rapid decrease in crude imports.