Vitol CEO Russell Hardy reported that approximately 12 million barrels per day of crude oil and 2 million barrels per day of refined products have recently left the Middle East. This flow, totaling 14 million barrels per day, is crucial for stabilizing global energy markets ahead of winter. Hardy warned that without this supply, oil prices could surge to $200 per barrel, underscoring the importance of sustained shipments.
The global oil market has faced multiple disruptions this year, evolving from a crude oil crisis to a products crisis and now a shipping crisis. Hardy highlighted the significant uncertainty caused by surging shipping costs, which have created stress across the industry due to unpredictable pricing.
Hardy noted that China acted as a buffer for the oil market in May and June by utilizing its oil stocks. However, other developing nations in Asia struggled due to their reliance on Middle Eastern supply chains and lack of buffer stocks. He also predicted that tightness in refined products markets would persist into winter, exacerbated by reduced refining capacity from hits on Russian infrastructure and lost refining runs in the Middle East.
Last week, the G7 agreed to release 100 million barrels of crude and diesel from strategic reserves via the International Energy Agency to ease market tightness. Hardy acknowledged that this release would provide some relief to Europe but emphasized the need for clarity on the volumes and sources of the crude and diesel. Brent crude futures were trading around $98 per barrel, while European benchmark diesel futures held a $70 per barrel premium to crude futures.