Oil Market “Comatose” as 1 Billion Barrels Are Lost | Kpler’s Matt Smith

Summary

Matt Smith of Kpler discusses the severe global oil supply crisis caused by the four-month closure of the Strait of Hormuz. He warns that inventories are being drawn down to critical levels and a major price spike is likely by July, despite current market complacency. The US is acting as a buffer by exporting heavily, but its own stocks are approaching operational bottoms. Smith advises investors to watch the data as the physical shortage will eventually force a dramatic price response.

• Strait of Hormuz closure has removed about 11 million barrels per day of crude supply.
• Global refinery runs have been cut by 9 million barrels per day, reducing product output.
• China has halted crude imports, temporarily freeing 4.5 million barrels per day for the rest of the world.
• US crude and product inventories are drawing rapidly toward operational tank bottoms.
• Cushing, Oklahoma inventories are near critical lows, which will tighten the WTI-Brent spread.
• The market remains complacent due to seasonal demand lull and political interventions, but a price response is inevitable.
• A major market breakdown could occur as early as July when stockpiles run dry.
• The US is the most transparent market and is in the best position, but its distress signals a global crisis.