Vitol CEO says current Middle East flows enough to prevent $200/barrel scenario

Investing.com -- The Middle East has exported around 12 million barrels per day of crude oil and 2 million bpd of refined products in the last 7 to 10 days, according to Vitol CEO Russell Hardy on Tuesday.

Hardy told the Energy Intelligence Forum in London that this flow of 10 million to 14 million bpd is maintaining energy market balance heading into winter. Western inventories have been largely depleted.

"Without it, you do have that $200 per barrel scenario, so it's pretty important that it continues," he said.

The global oil market has faced multiple disruptions this year, starting as a crude oil crisis before evolving into a products crisis and now a shipping crisis, Hardy said.

"We've had pretty parabolic pricing on shipping, which is creating a lot of stress for everybody, because nobody really knows to the nearest $2 to $4 per barrel how much their shipping costs are going to be," he said.

China served as a buffer for the oil market in May and June by using oil stocks to run its system, Hardy added. Developing nations in the rest of Asia faced difficulties due to lack of inventory buffers and close supply chain links to the Middle East.

Hardy said refined products markets will remain tight into winter.

"The world is still short of refining capacity, principally because of the hits on Russian infrastructure and the loss of five months of refining runs in the Middle East," he said.

The G7 agreed last week on a coordinated release of 100 million barrels of crude and diesel from strategic reserves through the International Energy Agency after the US threatened an export ban.

The diesel release will provide some market relief in Europe, Hardy said, though clarity on volumes and sources remains needed.

"We have a price effect and a very difficult market, but nobody's not had diesel at the pump in Europe," he said. "So governments are trying to balance in this instance Trump, the IEA, the needs of their consumers, and the strategic nature of those stocks."

Brent crude futures were trading around $98 per barrel on Tuesday, while European benchmark diesel futures' premium to crude futures was around $70 per barrel.

Original Article

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