Conflicts disrupt 45M barrels/day of oil supply, global rationing ensues

A recent report from OilPrice.com highlights that nearly half of the world’s oil supply originates from regions embroiled in conflict, affecting approximately 45 million barrels per day. This disruption has led to significant physical supply challenges and global rationing. The ongoing conflicts in the Middle East, coupled with export restrictions from Libya and Venezuela, have compounded the supply strain. The International Energy Agency (IEA) indicated that current global oil supply has dropped below demand due to these disruptions, causing pressure on inventories and physical flows. Key Takeaways The report suggests that conflicts affecting 45 million barrels per day of oil supply could lead to increased oil prices. Market pricing implies a low probability of crude oil reaching a new all-time high by September 30, with current odds at 2.1%. The December 31 market shows a higher implied probability of 12.5% for reaching a new all-time high, suggesting potential catalysts in the coming months. What to Watch Key actors such as OPEC’s Secretary General Mohammad Sanusi Barkindo and IEA’s Executive Director Fatih Birol may influence future developments. Market participants will be mon...