Oil Surge Continues, Sending Oil Service Stocks Higher

The global economy relies heavily on oil production and transportation to function smoothly. With nearly 100 million barrels of oil produced daily, any disruptions in this process can have significant impacts on the market.

Policymakers are finally learning about the intricacies of oil markets, including refining margins and crack spreads, which have increased significantly due to recent geopolitical events.

European Central Bank President Christine Lagarde and BoE Governor Andrew Bailey have acknowledged their own lack of understanding of oil market mechanics until recently. Oil accounts for 40% of global energy production and 96% of transportation fuel.

The current surge in oil prices has created a bullish supply posture, making it increasingly difficult for oil companies to invest in new projects due to high costs. This has led to increased investment in refining capacity, which is expected to remain strong for several years.

Oil service companies such as Schlumberger (SLB) have benefited from the increased demand for their services and are trading at record highs, despite not yet reaching all-time highs.