With the confirmation of OPEC+ delaying their output hikes, it looks like crude flat price will cling on to 70 for a while longer. The group has certainly bought themselves some more time, but at what cost? That is not a rhetorical question. Their market share is eroding as fast as Manchester City’s form, and our global oil balance suggests that it would be wise for the group to delay the cuts until 2026. Event risk has been one of the sole bullish drivers of flat price, with the flurry of headlines coming out of both the Middle East and Eastern Europe. But for a sustained rise, global crude demand must play ball. Climate activists will rightfully point out that the world is consuming as much oil as ever, but if you followed the narratives in our market you would be forgiven to think that we have already reached peak oil and that the end is nigh. But in the near-term, OPEC+ have really tightened the market. North Sea physical differentials remain supportive, gasoline cracks are on the rise, and US crude inventories are seasonally on the low side. We expect the bears to win the war, but the bulls are winning out this battle, demonstrating some exceptional resilience.
