more to come

Oil markets are holding firm above the $100 mark, but underlying conditions suggest a far tighter global supply picture than benchmark stability implies. According to JPMorgan, the apparent resilience in Brent and WTI prices should not be mistaken for evidence of ample supply. Instead, it reflects a temporary buffer created by regional inventory overhangs, benchmark composition effects, and policy interventions that are masking deeper structural strain.

That view is increasingly supported by developments on the ground in the Middle East, where escalating disruptions to energy infrastructure are beginning to materially constrain supply. The United Arab Emirates has seen significant interruptions to its export capacity following a number of attacks, including a third strike in four days that triggered a fire at the key Fujairah export terminal. While the facility remains operational, it is running at reduced capacity, with ADNOC crude loading still partially suspended.

The broader impact is substantial. The UAE, OPEC’s third-largest producer, has reportedly seen crude output fall by more than half since the conflict began, as the effective closure of the Strait of Hormuz has forced widespread production shut-ins. The strait, a critical chokepoint through which roughly a fifth of global oil supply typically flows, remains heavily constrained amid Iran’s tightening control.

Additional disruptions have compounded the situation. Operations at the Shah gas field, a major supplier to the UAE’s domestic grid, remain suspended following an earlier attack, while maritime security risks continue to escalate. A Kuwait-flagged tanker was struck near Fujairah on Tuesday, underscoring the growing vulnerability of shipping routes in the region.

Despite these developments, price action has remained relatively contained within recent ranges, with Brent trading between roughly $100 and $105 per barrel. However, market participants are increasingly wary that the current stability may prove fragile. With export routes constrained, production curtailed, and geopolitical risks elevated, the underlying supply-demand balance appears significantly tighter than headline prices suggest.

Expectations I had seen:

• headline crude oil +0.4mn barrels
• distillates -1.5mn bbls
• gasolina -1.6mn bbls

This data point is from a privately-conducted survey by the American Petroleum Institute (API).

• It’s a survey of oil storage facilities and companies
• The official report is due Wednesday morning US time.

The two reports are quite different.

The official government data comes from the US Energy Information Administration (EIA)

• Its based on data from the Department of Energy and other government agencies
• Whereas information on total crude oil storage levels and variations from the previous week’s levels are both provided by the API report, the EIA report also provides statistics on inputs and outputs from refineries, as well as other significant indicators of the status of the oil market, and storage levels for various grades of crude oil, such as light, medium, and heavy.
• the EIA report is held to be more accurate and comprehensive than the survey from the API