- Implied US oil demand is surprising to the downside.
- While it's still a bit early to call this, high oil prices are starting to have an impact on demand.
- We give a list of scenarios below on what happens to oil market balances if 1) Russia loses no production, 1 million b/d, or 2 mb/d, and 2) Iran sanctions.
- Oil markets are likely to keep staying in the deficit going forward as our scenario analysis has demonstrated. If Russia loses at least ~1 million b/d of production and Iran doesn't come back, oil prices will have to keep going up to induce more demand destruction.
- SPR releases will help tame some of that price increase, but the only way to fight this deficit is for prices to increase to reduce demand. There's no other way around it, and we are starting to see some of that take hold.
For further details see:
Oil Demand Surprises To The Downside, What This May Mean For Prices