Oil Supply Deficit Supports Oil in 80-90$/bbl Range: OIES

Oil prices will be supported in a range of 80-90$/bbl with depleting stockpiles and a global market deficit of 1.3mbpd in H2 2023 according to the Oxford Institute for Energy Studies.

• OIES see a Brent rally above $85/bbl preceded by strengthening of physical market differentials as Saudi Arabia curbs supplies and fears of recession fade. Brent is forecast at $83.40/bbl in Q3 and $86.50 in Q4.
• Chinese oil data flow “has been generally more positive,” with refinery runs and crude imports rebounding strongly in H1 2023. “China’s recovery remains uneven and the rebound is less strong than originally projected.”
• Saudi Arabia and OPEC+ have shown readiness to act pre-emptively and not restore supply until trends are confirmed.
• There is convergence in oil policy between Saudi and Russia with both announcing cuts.
• Markets have “adjusted well” to global flow changes though trade routes have grown longer and flows less transparent.