Why Oil Supply May Stay Tight for Months
Speakers
Martijn Rats
— Executive Director, Goldman Sachs
Summary
Martijn Rats argues that oil supply disruption in the Strait of Hormuz will take months to resolve, with the market overly optimistic about a quick recovery. He details physical constraints like tanker repositioning, storage limits, and well restart issues. Brent price forecasts suggest elevated prices through 2026 before gradually normalizing.
- Roughly 11 million barrels per day of Gulf crude remains offline due to Strait of Hormuz disruption.
- Market expects a clean near-term recovery, but physical constraints suggest a slower process.
- Only 75% of lost supply may return within four months after flows resume; remaining 25% could take into 2027.
- Buffers from US exports and strategic reserve releases are thinning.
- Brent forecast at $110 for Q2, $100 Q3, $95 Q4, $85 for Q1 2027, eventually $80.
Trade Ideas
Oil supply recovery slower than expected
The market is too optimistic about a quick recovery of Middle East oil supply through the Strait of Hormuz. Actual restart faces multiple constraints: ships need to be willing to sail, tanker fleet is misplaced, storage limits, and oil fields need restarting with 10,000 wells offline, 4-5,000 facing restart constraints. Only 75% of lost supply may return within ~4 months after flows resume, with final 25% taking into 2027. Buffers are thinning: strategic reserve releases dropping, US gasoline/diesel inventories low, China crude buying likely to return. Brent forecast $110 for Q2, $100 Q3, $95 Q4, $85 Q1 2027, eventually $80.
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This Morgan Stanley video, published June 04, 2026, features Martijn Rats discussing BNO. 1 trade idea extracted by AI with direction and confidence scoring.
Speakers: Martijn Rats · Tickers: BNO