On Track To Break Weekly Streak Of Gains Despite Lingering Supply Worry

WTI and Brent are ~$0.60 worse off apiece, operating a little under Thursday’s best levels at typing.

• Both benchmarks are nonetheless on track to end the week lower, snapping a streak of consecutive higher weekly closes (seven weeks for WTI, four weeks for Brent), as a slew of ultimately hawkish central bank decisions from Europe to the Americas this week has brought debate re: recessionary risks (and thus reduced energy demand) to the fore.
• Looking to the Middle East, U.S. Treasury officials on Thursday announced sanctions on Chinese, UAE, and Iranian companies for breach of crude-related sanctions on Iran. The move cratered earlier, scant hopes for the U.S. to ease sanctions on Iranian crude in the face of tight global supplies, seeing WTI and Brent flip to session highs after hitting two-week lows.
• Elsewhere, RTRS source reports have pointed to OPEC+ producing 2.7mn bpd below quotas in May, mainly on well-documented production issues faced by some members, as well as ongoing sanctions on Russian crude.
• Libyan crude production in particular is expected to continue facing issues in June, with the country declaring on Tuesday that output is around 100K - 150K bpd (output in 2021 was ~1.2mn bpd) in the face of the country’s previously-flagged political woes.
• BBG source reports have also pointed to the likelihood of the U.S. introducing a partial ban on fuel exports (currently estimated at ~755K bpd), possibly exacerbating well-documented supply worries in Europe as the Biden administration continues to explore ways to tamp down surging gasoline prices at home.