Energy Strategist – Energy markets remain tight
Energy markets remain under pressure despite recent policy interventions and efforts to boost supply. While coordinated releases of strategic reserves and the rerouting of energy flows have provided some relief, low inventories, ongoing geopolitical uncertainty, and constrained infrastructure continue to leave oil, gas, and refined product markets vulnerable to further disruptions. The following highlights the key developments across these markets.
Oil markets
The coordinated G7-IEA release of 100 million barrels has eased oil prices only slightly, because it largely reflected prior commitments
The oil market remains tight, as shown by the high premium for immediate delivery (including high transportation costs)
Middle Eastern exporters are restoring flows through alternative routes and shipping methods, bringing exports back close to pre-conflict levels
However, low inventories and continued uncertainty are keeping the market sensitive to further disruptions
Gas markets
European gas storage is expected to reach around 78% by November, well below the 90% target
Under normal winter conditions, storage could fall to about 24% by the end of March; a severe winter could reduce it to a critical 10-15%
Alternative supplies and weaker demand - particularly from price-sensitive Asian buyers - can partly offset disruptions to Qatari LNG
However, Europe still lacks a sufficient operational buffer, leaving the market vulnerable to weather and supply shocks
Refined product markets
The G7 announcement has lowered refined product prices and refinery margins
Tight crude supply, low inventories, high transport costs and strong demand will keep prices elevated
Refinery disruptions across Russia, the Middle East, Asia and Europe are limiting output
Global refinery throughput is unlikely to recover to pre-conflict levels this year