Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

I had the opportunity to rejoin Erik Townsend on the MacroVoices podcast for another update on how I’m thinking about the Iran War and the Hormuz oil shock—and why prices aren’t higher! (audio, 46:30-forward). I also joined Agelica Oung on the Taipology podcast to talk about China’s role in the crisis response so far (and lots more on that in this week’s writeup below). I spoke with the Financial Post to talk about the 1.5 billion Middle Eastern barrels we can already count as lost so far in the crisis.

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.

Summary

Flat Prices rose through Wednesday before easing back, ending ~$1/bbl higher as the market remains in a perilous limbo, awaiting any sign of progress in negotiations between Washington and Tehran.

Timespreads restrengthened from last week’s end-of-month swoon as all major crude benchmarks are holding $2-3/bbl in prompt backwardation; that’s substantially weaker backwardation than we saw at the heights of late-March/early-April but still represents extreme tightness.

Inventories data mixed but, again, leaned bullish on the back of a collapse in Singaporean inventories; US total crude inventory draws hit a whopping -18 MMbbl, split equally between commercial and strategic stocks, and the mild bounceback in US gasoline stocks capped the largest (and tied for longest) stretch of consecutive gasoline draws on record.

Refined Products markets remain tight and choppy; both gasoline and diesel crack spreads were roughly flat ($35/bbl and $60/bbl, respectively), though gasoline, in particular, finally caught some breathing room

Market Positioning data confirmed that speculators were once again net sellers of crude futures and options contracts over the past week-through-Tuesday, driven largely by a continued buildup in gross short positions. The leaking of this speculative length is gradually removing a key downside risk for crude prices while at the same time beginning to build up the dry powder that will provide explosive upside to the next rally should inventories continue to drain and fundamentals retighten anew.

As Well As China China China (all I can think about is China), Iran wants its pallets of cash, Trump envoys begin technical nuclear consultations with US national lab, and yet another new UAE pipeline plan.

What Happened This Week

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Like last time, we’re posting a recording of the call for oil watchers who weren’t able to make it live.

There’s a ~3:30 minute preview of the call available to all subscribers that covers an update to Hormuz transit traffic, and paid subscribers can watch the full ~75-minute Context Call recording above.

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Our latest contribution to the Dispatch Energy newsletter, A Beginner’s Guide to Reopening the Strait, is reprinted in full below. You can also listen to the story via the recorded voiceover.

Welcome to Dispatch Energy! For weeks, diplomatic efforts to extend the ceasefire in Iran and reopen the Strait of Hormuz have floundered, with the Islamic Republic threatening to call off talks altogether in response to the latest round of fighting between Israel and its Lebanese proxy, Hezbollah. Even if Washington and Tehran do reach another memorandum of understanding (MOU) to halt the conflict soon, fully restoring energy shipments through the strait could take months or more.

Regardless of whether the reopening of the strait begins next week, next month, or next year, it is valuable to think through the arduous process of unwinding the Iran war shock. Let’s dig in.

It’s worth noting at the outset that the first ships out of the Strait of Hormuz will carry what is now effectively a stockpile, not fresh flows. Fewer than half of the 2,000 captive ships are the large merchant vessels like tankers, bulk carriers, or container ships. Only about 200 of those are tankers, down from a peak of around 250 that were initially stranded, according to tanker-tracking data from market data provider Kpler. Those roughly 200 tankers are holding an estimated 160 million barrels of (stockpiled) oil. These barrels—when successfully floated out of the strait—are frequently mistaken for “offsets” to the supply crisis. But it’s important to think about them, instead, as a stockpile: barrels that have been produced but not supplied to the market.

The initial surge of Hormuz exits will simply move one “stock” of oil from the Gulf to the broader market. While this, no doubt, provides some immediate supply relief, it is more equivalent to a release from one of the numerous strategic petroleum reserves in terms of the overall oil stock and flow. Meanwhile, the core flow crisis remains because 13 to 15 million barrels per day of Middle Eastern oil production capacity has been forcibly shut-in by the closure of the strait, and this production will not restart until there is sufficient export capacity.

We must also consider timeline and volume. Iran has pledged to facilitate a return to prewar shipping levels within 30 days of the MOU’s signing. Depending on the source (e.g., S&P Global, Lloyd’s List), this refers to the roughly 150 large merchant ships that transited the strait each day prior to the war’s opening salvoes on February 28. But this figure includes not just tankers but also bulk carriers carrying goods such as metals, food, and fertilizer. Ultimately, the pace at which stranded vessels will clear the Gulf hinges entirely on the volume that Tehran allows to cross the strait each day. And that volume will hinge entirely on whatever MOU is ultimately signed by both parties.

Complicating matters further is that current shipping levels are unconfirmed, which could make monitoring MOU compliance on this condition difficult. Iran has been reporting oddly high transit levels via state and social media, claiming earlier this month that 30 to 40 ships were crossing the strait each day. But tanker tracking tells a completely different story: Fewer than 10 daily transits and on some days only two. The easiest explanation for the discrepancy is that the IRGC is counting smaller vessels, which ultimately don’t move the needle on commercial disruptions. This may be an effort to show “responsible management” of the strait, but I fear these inflated numbers could be used to claim compliance in reopening the strait in the event of a deal.

And it’s not just Iran that is being vague about vessel counts. The U.S. has claimed that it has “guided” 70 ships across the strait over the past three weeks, largely with their automatic identification system transponders deactivated. This is a plausible figure but, again, that’s only three to four ships per day across a waterway that regularly saw 130 to 150 daily transits prewar. More substantively, it remains unclear what this “guidance” actually amounted to and, more importantly, these “dark transits” have been entirely unverified to date.

Regardless, caution will be required in the early days of reopening. While there has not yet been any confirmation of a tanker detonating any of the sea mines that Iran continues to lay in the waterway, the first stage of any reopening effort would be weeks of escorted and closely surveyed transits to establish initial safe channels for entry and egress. Minesweeping is arduous and time-consuming work; a Pentagon briefing to Congress estimated that it would take up to six months to fully clear the strait of mines. And demining will not begin until the war has verifiably ended and ships can operate without the threat of Iranian missile and drone attacks.

Rebuilding routes.

Once the strait begins to empty, the next step is for tankers to (re)enter the waterway. The only way to begin restoring the enormous volume of oil and natural gas liquids (e.g., propane) production currently shut in across the Middle East is to restore export capacity. New, unladen tankers need to pick up currently stranded crude and enable companies to begin restarting shut-in wells.

Unfortunately, it will take weeks, if not months, to resume a prewar flow of inbound Gulf traffic. First and foremost, outbound ships that have been trapped for months will have a strong incentive to rush the exit, while inbound ships will be, very reasonably, apprehensive to reenter the waterway. This will be especially acute in the first days as the durability of any ceasefire agreement is tested. But even after that, the ever-present prospect of resumed hostilities will remain as the two parties try to find agreement on the always-thorny nuclear file.

There are also purely logistical concerns. Outbound ships will spend weeks or months delivering their cargoes before returning to the region to refill. These vessels will also likely require new crews in many cases and may be even further delayed by maintenance after months of irregular use. The stranded ships have reportedly accumulated thick barnacle infestations, which reduce speed and fuel efficiency and even threaten to completely immobilize the propellers or steering systems. Barnacles are always an issue for ships, but the acute infestation was worsened by sitting idle for months in extremely warm water. Some of this work will be required before the ships can safely exit the Gulf, and further, non-emergency work will be needed before they can return to normal service.

Meanwhile, potentially inbound ships have been diverted en masse. Many of the ships that had been servicing the Middle East-to-Asia route have diverted to facilitate the growing flood of exports from the U.S. Gulf Coast, which has put many of them on the wrong side of the planet were Hormuz to reopen tomorrow. Getting them back from the four winds will take weeks, and that’s after owners and insurers have decided it’s safe to return.

Resuming production.

Restoring upstream production is the only true offset to the gaping hole in the global supply balance. Over the past three months, 12 to 14 percent of global oil production has been lost, and the accumulated sum of unproduced Middle Eastern oil already exceeds 1 billion barrels relative to what we expected the region to produce this year. If this reopening began next week, unproduced oil would likely settle at around 1.5 billion barrels given that the restart process will take time.

And no one knows how long that restart process will take. This is a truly unprecedented event in both the brisk pace of shutdowns and the enormous scale of the reopening. In the best-case scenario, it will take weeks to months to get these wells flowing again. Ultimately, the exact timeline will vary by country and, more specifically, the depth of cuts. Saudi Arabia has been able to divert some of its oil exports via the East-West Pipeline to the Red Sea, so its production is only down roughly 30 percent. Meanwhile, Iraq and Kuwait have had to cut far closer to the bone; the CEO of the Kuwait Petroleum Corporation said in March that, were the war to end immediately, it would take three to four months to recover prewar levels of production.

Meanwhile, despite the broad expectation that shut-in production can be ramped up to prewar production levels without too much trouble, the extent of damage to upstream facilities remains unknown. Just one example: Iran struck Qatar’s Ras Laffan liquefied natural gas export facility in mid-March, causing what QatarEnergy’s CEO described as a reduced export capacity of 17 percent for up to five years. Even a 5 percent loss of overall prewar volumes would mean a sizable long-term hit of 650,000 barrels per day to global oil supply.

But the greatest threat of durable damage is to downstream facilities, such as refineries and petrochemical facilities. These were Iran’s preferred targets in the early weeks of the war, and most of the Gulf states have closely guarded information pertaining to the type and scale of facility damage. Durable damage to these sites could hamper immediate postwar supplies of scarce jet fuel and diesel even if crude flows are restored.

Looking ahead.

There is no “normal” going forward. The Strait of Hormuz had never been closed before, and this unprecedented event makes it much more likely that it will be closed once again in the coming years. This is a gargantuan shift in risk outlook for the world’s most important source of oil supply.

All of this means that inventories are critical moving forward. First, countries across the world will need to restock their reserves following massive wartime releases. Second, the new reality will be an expansion of postwar inventories, both strategic and commercial. It’s been clear throughout this crisis that countries underinvested in strategic stockpiles, like India, have been particularly vulnerable to the Hormuz shock and are now working to expand their reserves.

Inertia is the greatest hurdle at this stage, with neither Iran nor the U.S. seeming sufficiently compelled to cede ground and come to an agreement. Every week that this crisis drags on puts additional fundamental strain on the oil market: falling stocks, growing scarcity, and rising prices to curtail demand. If President Donald Trump chooses only to make a deal when the market pain becomes acute, then this fundamental strain could continue to accrue for months—even after Washington and Tehran finally ink an agreement.

The oil market has been abnormally patient thus far through the largest supply shock in the industry’s history, but that patience can only hold for so long. Commercial inventories and other buffer stocks are drawing down at the fastest rate on record and prices will eventually need to ratchet higher to ration constrained supplies.

Disclaimer: These materials incorporate third-party data, are provided for informational purposes only, and do not constitute advice or opinion of any kind. Commodity Context does not warrant or guarantee the accuracy or completeness of these materials.

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• North American petroleum liquids production advanced +239 kbpd m/m to 31,141 kbpd in March (+924 kbpd y/y) driven almost entirely by the US; Canadian growth took a temporary breather while Mexico improved from a heavy drag on continental output to a modest boost.

• Continental petroleum product demand fell -803 kbpd m/m to 25,019 kbpd in March (+555 kbpd y/y), with the US propelling the bulk of that growth thanks to heavy increases in NGL demand. US refinery output also saw a stark shift in yields away from gasoline toward globally scarce jet fuel amidst exploding margins, helping stave off jet fuel shortages at the cost of tighter gasoline markets.

[Full PDF Deck and Country-Level Analysis Below Paywall]

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

Hey Subscribers, I will be in New York City between June 9th and June 11th for the StoneX Natural Resources Summit and would love to meet up! Please complete this survey if you are interested.

On the latest episode of the Oil Ground Up podcast, I was joined by Bob McNally, founder and president of Rapidan Energy Group, former White House energy advisor to President George W Bush, and the author of Crude Volatility: The History and The Future of Boom-Bust Oil Prices. Our conversation focused on the history of the market’s view of the Hormuz risk, the latest status of negotiations between Washington and Tehran, and the longer-term consequences to the geopolitics oil the oil market.

For more FREE oil context, check out my appearances on CNBC Asia (video), TVO’s The Rundown (video), BNN Bloomberg (video), MTSLive (video, 4:08-4:33) as well as in the Atlantic (print).

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Summary

Flat Prices fell roughly $11.50/bbl this week to end at ~$92/bbl Brent as optimism about a deal to reopen the Strait of Hormuz reached its highest level since mid-April; May 2026 now marks the steepest monthly crude price decline since March 2020.

Timespreads sank further, with all major crude benchmarks shedding roughly half of the prompt backwardation with which each started the week; prompt Brent saw spreads sink even further on the final day trading for July Brent.

Inventories data leaned bullish, once again, given declines across all major tracked hubs; US stockpiles saw another massive drawdown and, while half of that was SPR crude, the balance of drawing pressure pulled both commercial gasoline and diesel stocks further below trailing seasonal lows.

Refined Products markets remain tight and crack spreads elevated: US gasoline and diesel crack spreads are holding at roughly double and triple the seasonal averages, respectively, underpinned by plunging US inventories despite sky-high refinery run rates amidst surging export demand.

Market Positioning data revealed the heaviest week of speculative selling since the start of the Iran War in February, explaining about half the w/w price decline through Tuesday and very likely continuing through the end of the week given the sustained downside price pressure; this selling pressure, while obviously price negative, is eroding what had become a clear downside price risk in overextended and stagnant speculative length.

As Well As Do we have a deal?; Trump’s view on the negotiations and Iran’s substantive rebuttal; and Trump delays his “final determination” one more time.

What Happened This Week

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Overview

• The global liquids market flipped from protracted surpluses to the largest monthly average supply deficit on record in March, following the onset of the Iran War and the shuttering of the Strait of Hormuz. Global visible petroleum stockpiles drew at an equivalently record pace, though the full extent of those draws was blunted by the preexisting surplus and the initial Asian demand contraction, especially in China (if it was, indeed, a true demand decline—see: Chinese Demand Destruction or Strategic Supply).

• Nonetheless, the rapid observed rate of inventory declines remains fundamentally unsustainable; while the buffers (e.g., oil on water, strategic inventories) have bought time, Hormuz must be reopened over the next month to avoid precariously low inventories and price spikes through the summer driving season.

• The latest peace negotiation headlines are promising but previous efforts have collapsed on competing interpretations of the details; even the more optimistic leaks of the draft MOU indicate that it may be another month before Iran allows Hormuz transits to return to pre-war levels, even if a deal is signed soon.

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

Hey Subscribers, I will be in New York City between June 9th and June 11th for the StoneX Natural Resources Summit and would love to meet up! Please complete this survey if you are interested.

On the latest episode of the Oil Ground Up podcast, I was joined by Edward Fishman, a senior fellow and director of the Maurice R. Greenberg Center for Geoeconomics at the Council on Foreign Relations, as well as the author of one of my favourite books I read last year, Chokepoints: American Power in the Age of Economic Warfare, which provides an incredible account of the development of the US economic statecraft toolkit, with Iran the original proving ground for much of that policy evolution; our conversation focused on sanctions policy backdrop and the kinetic conduct of the Iran War.

For more free oil context, check out my appearances in this CNN Hormuz crisis explainer (video) and on The Simardone Show (video).

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Summary

Flat Prices sank roughly $6/bbl on the back of another bout of Iranian negotiation optimism, driven lower by repeated statements by President Trump that “we’re in the final stages of Iran” and the “Iran conflict will end very soon”.

Timespreads followed the trajectory of flat prices lower as prompt Brent timespreads fell from ~$5/bbl to nearer $3/bbl, and all other major benchmarks following suit; this is a reversal of the prevailing trend through the crisis, in which term structure strengthens into month-end contract expiry.

Inventories data were mixed but leaned heavily bullish given the largest SPR-inclusive US crude oil stock draw on record (-17.8 MMbbl w/w) and US gasoline inventories continued to plunge further to the lowest, seasonally-adjusted level since 2014.

Refined Products markets saw diesel crack spreads continue to trade sideways around $60/bbl, below the early-April peak of ~$90/bbl but still nearly 3x the typical level; gasoline margins slipped back to around $40/bbl from the extremely heady nearly $50/bbl reached last week.

Market Positioning data revealed that speculative participants were modest net buyers of crude over the past week-through-Tuesday, though, as has been the trend over the past month, shifts in hot money flows have been small and have, generally, failed to move the needle on pricing relative to broader physical participant influence; that said, speculative positions remain high relative to the pre-war norm and, thus, represent a lingering downside risk to prices should we see a real breakthrough in negotiations.

As Well As another week defined by Iran War negotiation hopes and jawbone market interventions; still watching the bouncing diplomatic ball; handicapping the odds of a return to war; and Iran announces new Hormuz transit regime and regulatory body in the Persian Gulf Strait Authority (PGSA).

What Happened This Week

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• Our normal indicators of China’s petroleum demand have collapsed, from a more than 40% reduction in crude imports to the steepest contraction in domestic Chinese refining activity since COVID-zero in 2022.

• However, mobility indicators remain robust and show minimal signs of true demand destruction, with flights, truck traffic, and road congestion all sitting at healthy levels.

• The pullback in imports far outpaces the pullback in refining runs, which, in turn, outpaces any evidence of a retrenchment in end-user activity; in addition, visible inventory data has remained flat-to-higher.

• This incongruence of flows indicates a high likelihood that the Chinese government is injecting a substantial volume of strategic petroleum stocks—both crude and finished products—into the market, providing critical supply relief to Hormuz-starved Asia and buying additional time before the scarcity panic really bites.

The financial consequences of the closure of the Strait of Hormuz are accumulating slower than initially expected (read: Sanguine Strait Stoppage). One argument is that material demand destruction is already visible in one of the world’s most important markets: China. As the largest and most variable demand centre in Asia, China is very much “ground zero” for how the Hormuz Crisis is playing out. Indeed, we have already seen a measurable, 40% decrease in Chinese crude imports from 11.5 MMbpd in February to a May month-to-date average of less than 7 MMbpd.

Digging in, there is a confusing assortment of volatile trade and refining data to parse. Chinese crude imports have fallen faster than refinery run rates, which have fallen faster than visible mobility data. Together, this indicates that China is likely drawing statistically invisible inventories of both crude and refined products to sustain demand. In other words, this is not true demand destruction but, rather, temporary supply relief in the same vein as the US and Japanese SPR releases, keeping the market looser than it otherwise would be right now.

This highlights a more structural and analytically discomforting reality: despite unprecedented visibility into global oil inventories and seaborne trade (thanks to the proliferation of alternative data vendors), large portions of China’s oil industry remain troublingly opaque. Today, this represents the largest blind spot to the market’s collective statistical model of the oil industry. And, more urgently, this leaves the market guessing as to when China’s aggressive SPR support will be exhausted or otherwise withdrawn, which would prompt a renewed surge in upward pricing pressure.

Let’s review the Chinese data that we do have—from imports through refining and on to end consumer behaviour—to get a better sense of whether this looks more like true demand destruction or mere temporary supply relief.

Import Implosion

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

This week, I joined Jimmy Connors of Bloor Street Capital (video) and MacroVoices (podcast, 56:00 onward).

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Summary

Flat Prices rose ~$8/bbl for Brent to finish just shy of $110/bbl as last week’s optimism that a deal might be reached began to fade amidst deadlocked US-Iran talks and no meaningful progress coming out of Trump’s trip to China this week.

Timespreads bottomed on Monday and then gradually grinded higher, repeating the well-trodden path of buyer wariness through the first half of the month before being forced to bid more aggressively ahead of contract expiry; the back of the curve, too, continues to rerate higher as global inventories are depleted.

Inventories data was mixed but still leaned bullish given another large US draw and ARA European stocks down to ever more precarious seasonal levels; Singaporean stocks notched a small build after three consecutive weekly draws.

Refined Products markets continue to indicate mounting tightness in US gasoline markets, with New York Harbor gasoline crack spreads rising to within striking range of the all-time high set through the energy crisis summer of 2022.

Market Positioning data confirmed the steepest week of proportional speculative selling of major crude contracts since the beginning of the war; however, while still elevated, hot money flows have had an increasingly inconsequential effect on the crude pricing complex compared to their typically outsized role in non-crisis markets.

As Well As Hopes disappointed that China summit would yield Hormuz breakthrough; US-Iran talks thoroughly stalled on nuclear bottleneck; the crucial difference between Hormuz crossings and real production relief; Iranian onshore inventories continue to rise amidst collapse in tanker loadings; US SPR release hits all-time high outflow rate; UAE to double pipeline reroute capacity around Strait of Hormuz; and Ottawa and Alberta advance West Coast pipeline plan.

What Happened This Week

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Below the paywall you will find the latest monthly edition of the Commodity Context OPEC+ Data Deck (50-page PDF), tracking groupwide and member-level official production estimates, quotas, compliance, exports, and official production data reconciliation vs output implied by visible movements.

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• Quota participating OPEC+ crude production fell another -1,625 kbpd m/m to 26,558 kbpd in April, according to official OPEC secondary source aggregate data, which represents a fresh 35-year low for OPEC and a new all-time bottom for the larger OPEC+ group; monthly declines largely reflected the fact that Hormuz-driven shut-ins affected all of April versus only roughly three-quarters of March operations.

• In late-April the UAE announced that it would be exiting OPEC effective May 1st, likely driven by a desire to monetize substantial unutilized production capacity, political outrage regarding its disproportionate share of attacks from Iran without any added protection, and leveraging the rare opportunity of the Iran War during which a quotaless UAE won’t immediately mean more production into a weak market as it would have as recently as February; endless premature obituaries have been written about OPEC over the decades and the producer group will likely find a way through this episode as well, but make no mistake that this Emirati departure is the most serious

[Full PDF Deck and additional analysis below paywall]

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

On the latest episode of the Oil Ground Up podcast, I was joined by Eric Nuttall, a partner and senior portfolio manager with Ninepoint Partners LP, where he manages the Ninepoint Energy Fund and Ninepoint Energy Income Fund; our discussion focused on the unprecedented Hormuz energy crisis, how the largest energy shock in history is affecting the value of North American oil and gas producing companies, and what “the day after Hormuz” looks like for the global oil market.

For additional context, check out my appearances on CBC’s Power and Politics (video), the Arc Energy Ideas Podcast (audio), the Majority Report (video), and TopTV (video).

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.

Summary

Flat Prices are down ~$7.50/bbl with Brent ending the session around $100.50/bbl; prices shot up on the back of escalating regional violence early in the week but pulled back sharply on Wednesday on yet more news of a potential peace agreement before bouncing around the $100/bbl mark.

Timespreads rolled over alongside flat pricing in a pattern that we’ve come to know: structure tightens into futures contract expiration and loosens through early month trading as the market holds out for some kind of resolution to the Hormuz crisis.

Inventories data revealed a resumption of draws across all major hubs—and last week’s delayed Singaporean inventory data confirmed back-to-back, large declines; US high-frequency data—now amongst the most important in the oil market—shows stocks continuing to decline at a rapid rate, although half the pace this week vs. last.

Refined Products markets continue to richly price middle distillates, like diesel and jet fuel, but relative laggard gasoline is closing the gap; in the US, refining margins for the dominant road fuel are now roughly double the seasonal norm amidst plunging stocks and the need to attract gasoline cargoes to the East Coast.

Market Positioning data confirmed that speculators were modest net sellers of crude futures and options contracts, but that pricing shifts continue to vastly exceed what can be explained by hot money moves and indicates that physical market participants are still driving the bus through the crisis.

As Well As Hormuz transits far from free, US blockade enforcement picks up, a very violent week in the Strait, negotiating the pace and staging of negotiations, and Iran’s new shipping process.

What Happened This Week

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This report includes some additional charts and analysis above the paywall outlining recent trends in US weekly data, with a particular focus on the geographic spread of US crude inventories and the marked shift in trade flows.

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• North American petroleum liquids production surged back to life following the sizable shut-ins forced by Winter Storm Fern in January, rising +0.9 MMbpd m/m (+1.5 MMbpd y/y) in February to 30.8 MMbpd.

• Continental demand was shockingly strong in February at 25.8 MMbpd (+0.5 MMbpd m/m, +1.0 MMbpd y/y) driven by US growth, especially growth in US diesel consumption.

In addition to our regular monthly tracking, this month includes some context around the data published by the US Energy Information Administration (EIA) in its Weekly Petroleum Status Report (WPSR). Higher-frequency data is particularly important as the market attempts to handicap rapidly evolving fundamentals.

• The latest weekly US inventory data continued the prior week’s steep draws but at roughly half the pace; total US petroleum stocks fell -11.1 MMbbl w/w—between commercial stocks (-5.9 MMbbl) and the SPR (-5.2 MMbbl)—compared to a more than -24 MMbbl draw the prior week.

• US gasoline stocks are at the very bottom of their trailing 5-year seasonal range while diesel stocks are setting fresh 5-year lows, falling below even last year’s depressed levels.

• Only crude inventories are holding in there at still-elevated levels, with the bulk of those stocks held in the US Gulf Coast (USGC aka PADD3). Elevated inventory levels may have been, in part, reflecting precautionary demand as refiners hoarded barrels, which is behaviour—i.e., building inventories despite steep backwardation to hedge physical availability—that we saw in Europe in 2022. However, the bulk is, likely, best understood as export-staging stocks, which will be rapidly drawn down given that an armada of tankers continues to flock to the USGC to supply a Hormuz-starved global market.

• Two weeks ago, US total petroleum exports hit an all-time high of 14.2 MMbpd according to weekly EIA data—up from a pre-war January-February average of 11.1 MMbpd. Last week, those exports pulled back notably from that high-water mark; but, at 13.0 MMbpd, still represent a near-record, second only to the prior week’s high. At the same time, the pullback in headline exports was driven by crude oil while American exporters set a fresh all-time high export record for refined products, specifically, which rose +0.5 MMbpd w/w to 8.2 MMbpd.

• Finally, while exports are running hot, imports are running weak. Crude imports set fresh 5-year seasonal lows while gasoline, which was running exceptionally low over recent weeks, finally popped higher as the US East Coast attempts to accumulate supplies ahead of the upturn in summer driving demand.

[Full PDF Deck and Country-Level Analysis Below Paywall]

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Like last time, we’re posting a recording of the call for oil watchers who weren’t able to make it live.

Paid subscribers can watch the full ~80-minute Context Call recording above.

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

On the latest episode of the Oil Ground Up Podcast, I spoke with Michelle Bockmann about the unprecedented disruption in global oil flows following the effective closure of the Strait of Hormuz, the tricks in tracking the shadowing passage of ships through the critical maritime chokepoint, and assessments of the efficacy of the US’ ongoing blockade.

For more free oil context, check out my appearances on The Great Simplification podcast (video), the Bankless Podcast (video), and Breaking Points (video), as well as my latest column in The Dispatch (print).

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Summary

Flat Prices spiraled higher through the final day of Brent’s June contract expiry, hitting a crisis high of more than $126/bbl in early Asian trading before collapsing more than $12/bbl through the end of the day and settling around $114/bbl; prompt Brent crude prices rose $3/bbl on the week while the July Brent contract (now prompt) rose $9/bbl.

Timespreads were relatively flat albeit at crisis levels of backwardation, save a sharp spasm in Brent’s prompt timespread on the final day of the June construct’s trading; Brent prompt spreads, now trading July at prompt, sit above $6/bbl, WTI above $5/bbl, and Dubai around $4/bbl, with Brent DFLs still most steeply backwardated at ~$7.50/bbl.

Inventories data was mixed but dominated by a massive >-24 million barrel draw from US stockpiles, including -17 MMbbl of commercial stocks and -7.1 MMbbl of SPR crude; the US draw proved especially important for market sentiment, crystallizing the mounting global scarcity with highly visible and transparent data.

Refined Products markets continued to be driven by the rapid rise in gasoline prices, which outpaced crude again as gasoline crack spreads rose to their highest level since the energy crisis summer of 2022; diesel margins, meanwhile, remain acutely elevated (~$60/bbl) but traded flat-ish.

Market Positioning data confirmed that speculators were, once again, modest buyers of crude futures and options contracts, lifting their net position as a share of open interest to the highest of the Hormuz crisis; positioning-related risk remains squarely to the downside should these participants look to rapidly liquidate their length—likely amplified by a reaccumulation of currently depressed short interest; speculative positioning in gasoline contracts is on the high end but still lower late-2025 and an unlikely driver of the current RBOB rally.

As Well As Breaching the billion barrel threshold; the UAE’s abrupt departure from OPEC; Iran-US Diplomatic Digest; Trump weighs longer blockade to “explode” Iran’s oil industry; US SPR release rate rising above 1 MMbpd for the first time since 2022; Treasury clarifies that Iranian toll payments are sanctions violations; and Trump approves key permit for Bridge Pipeline Expansion to resurrect Keystone XL.

What Happened This Week

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In addition to our regular monthly tracking, this edition of the Global Oil Data Deck also explores some contextual analysis of how the roughly one billion barrels of guaranteed supply loss fits into the total pool of stocks and, more importantly, the far smaller pool of accessible commercial inventories.

Member Exclusive: Context Call on Tuesday, May 5, 2026

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Overview

• The global liquids market continued to tighten through February, falling to the least oversupplied level since last June at the peak of summer demand. This was already tighter than most had expected the oil market to be in Q1, and leaves the global oil market in an even more precarious position than would have been anticipated heading into the Iran War, the stoppage of traffic through the Strait of Hormuz, and the largest supply shock in the oil market’s history.

Iran War Inventory Impacts

• At this stage of the Iran War, we have already, more or less, guaranteed a net loss of roughly 1 billion barrels of unproduced Middle Eastern barrels that we would have otherwise been expected to be produced this year. And, with the latest reporting indicating that the White House is leaning toward an even longer blockade of Hormuz, that number could turn out to be much, much larger.

• I’m often asked how big that supply loss is in the scheme of the oil market: it obviously sounds large but is it really that big if the global market is already holding ~8.2 billion barrels of stocks (discussed in more detail below)? The answer is absolutely yes—though the distribution of impacts across those stocks will ultimately have the biggest effect on the pricing impact.

[Full discussion of the impact of Iran War supply losses on global stocks and inventories as well as the entire regular monthly update of the Global Oil Data Deck—72-page PDF report on market supply and demand fundamentals—and flow-level analysis available for subscribers below the paywall]

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

In the latest episode of the Oil Ground Up podcast, I spoke with Amena Bakr, Head of Middle East Energy & OPEC+ Insights at Kpler and a very long-time OPEC watcher, about the latest tracking of the Hormuz crisis, the shockingly sanguine market reaction thus far, and how the political and industry leadership across the region is attempting to manage through this unprecedented shock to their operations.

I had an absolute blast joining Jacob Shapiro and Marko Papic on the Geopolitical Cousins podcast to talk about the Hormuz oil supply hole. Come for the barrel math, stay for the “which Twitter replies drive me to douse myself with gasoline and light a match” game.

This week, I also spoke with CNBC Squawk Box Asia (video), Bloomberg Intelligence (video), and Palisades Gold Radio (video).

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.

Summary

Flat Prices rose more than $15/bbl to break the three-week stretch of declining oil prices, notching the first weekly gain since mid-March, as the Iran War continued to smoulder without resolution and the Strait of Hormuz remained closed for its 8th full week.

Timespreads began to strengthen again after weakening through most of April, with both Brent and WTI prompt futures timespreads more backwardated than this time last month; overall, extremely strong backwardation—albeit off from its late-March/early-April highs—continues to broadcast an urgent signal to draw down stocks.

Inventories data registered draws across all three major tracked hubs; US road fuel stocks continue to draw aggressively while crude stocks remain stubbornly high—stocks of the latter are largely concentrated in the US Gulf Coast and believed to be staging for an anticipated pickup in exports to a Hormuz-starved market.

Refined Products are split: diesel margins continue to, largely, trade in line with flat crude prices on Iran War headlines and remain extremely elevated but still below recent highs, while gasoline crack spreads have lagged middle distillates but more steadily ground higher—to more than twice the seasonal norm—as we head into summer driving season.

Market Positioning data confirmed that speculators were modest net-buyers of crude contracts this week, though that net-gain was driven almost entirely by a pullback in gross speculative shorts; overall, spec positioning in crude remains high and thus positioning-related risk continues to point largely to the downside should that hot money get cold feet.

As Well As following the bouncing diplomatic ball, tracking the on-again-off-again prospect for renewed talks in Pakistan, Hormuz transits see sporadic movement but status remains largely unchanged, renewed concerns about mines and the months-long timeline required to clear them, Trump extends Jones Act waiver for another 90 days, US military presence in the Middle East continues to grow, and the latest round of new Iran-related sanctions.

What Happened This Week

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• Despite broad expectations that crude prices would rocket higher, the market reaction remains shockingly sanguine—with prompt Brent futures prices, somehow, spending most of April below $100/bbl—in the face of the currently-dire geopolitical context.

• The best explanation for the juxtaposition between headline shock and pricing is a combination of the (lack of) realized inventory declines as well as Presidential jawboning and the April 7th ceasefire.

• The impact to date of the Hormuz closure is most visible in term structure; while (still) elevated commercial inventories have provided a healthy buffer against upwards pressure on the curve, record backwardation in both physical and financial prices is placing a premium on prompt deliverable barrels as a signal to rapidly draw down those stocks.

• Frequent and strongly-worded verbal interventions by the White House have unnerved futures market participants; short-term downside is acute when another Trump post can, and will, sink the intraday price of crude by $10-15/bbl.

• The largest pullback in prices occurred after the ceasefire announcement on April 7th; there is no doubt that the ceasefire has reduced, for now, the threat of extreme escalation, including more catastrophic damage to regional production infrastructure, but it has also thus far failed to end the conflict or reopen the Strait.

• If the Strait of Hormuz remains closed for another two months, commercial inventories will be rapidly drawn down and historical relationships suggest we could see prompt Brent prices approach $200/bbl by the end of June.

The Strait of Hormuz has been closed for over seven weeks, shutting in a staggering 13 MMbpd of non-reroutable Gulf liquids production. The upstream shut-in has already accumulated more than a half billion barrels in unproduced output, en route to roughly a full billion barrels given lagged restart times even if the Strait was to fully reopen next week. Yet, the market reaction is shockingly sanguine in the currently dire geopolitical context. Despite many calls—including from yours truly—that crude prices would head sharply higher, prompt Brent futures have, somehow, remained below $100/bbl for most of April.

Perhaps, this juxtaposition—between headline shock and pricing—cuts to the heart of something that I’ve long argued: oil futures aren’t especially good at manifesting the market’s collective forward view. Under the glare of this lens, I, and many other oil analysts, may have violated my own cardinal rule: expecting the market to anticipate the inevitable supply losses stemming from the closure of the Strait. Through the lens of realized and visible inventory draws, there’s a reasonable argument that the initial price spike was a fear-induced overreaction to the Hormuz shock: not in scale, per se, but in timing.

Therefore, the best explanation for the pullback in crude pricing through April is the combination of (lack of) realized inventory declines as well as Presidential jawboning and the April 7th ceasefire. The world has stocks—both commercial and emergency—to buffer a temporary shock and, so, we’ve seen much of the pricing pressure manifest in the very front of the futures curve and into the physical market. Meanwhile, the White House’s desperate attempts to jawbone and talk down market reactions have distorted market sentiment. Most recently, the ceasefire materially shaved off some of the worst tail risks, including more direct attacks on regional production infrastructure, though has thus far failed to meaningfully reopen the Strait.

Nearsighted Curve

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

In the latest episode of the Oil Ground Up podcast, I spoke with Adi Imsirovic, a long-time oil trader who now lectures at the University of Oxford and has written many books on the history of oil trading, the mechanics of the Brent crude complex, and the theory of price discovery. Our discussion focused on the connection between the physical and financial (i.e., paper) oil markets and what record-breaking backwardation means for the oil market.

This week, I spoke with MacroVoices (podcast, 48:00-forward), Facts vs Feelings (video), Competent Man (video), MacroHive (podcast), and Wall Street Journal (print).

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.

Summary

Flat Prices fell by ~$5/bbl for Brent to finish just above $90/bbl following a violent, near $10/bbl rout in crude prices that followed an Iranian announcement that the Strait of Hormuz was “completely open” (many caveats, discussed below).

Timespreads pulled back sharply alongside flat pricing as prompt timespreads of all major benchmarks fell back to their least backwardated level since early March; however, Brent prompt spreads and DFL spreads are still at ~$4/bbl and these are well above any other “normal” period (prompt timespreads are typically measured in cents!).

Inventories data were mixed given a large counterseasonal US draw, a modest decline in European stocks, and a large inflow into Singaporean storage tanks; US crude stocks fell on the week for the first time in nearly two months as a large armada of tankers heads for the US Gulf Coast.

Refined Products markets saw diesel crack spreads plunge alongside crude back to just more than $52/bbl in NYH vs. Brent; gasoline refining margins have continued to march higher, finishing at >$35/bbl vs. a seasonal norm nearer $20/bbl.

Market Positioning data confirmed that speculators were net sellers of crude contracts, but that as of Tuesday their net position remained very elevated relative to the trend of the past year; while those positions have likely come in notably following today’s sharp selloff, they surely remain elevated and, should de-escalation continue, will begin to contribute more meaningfully to selling pressure.

As Well As Today’s “complete opening” doesn’t really change anything, yet; The US blockade that began on Monday; Still considerable work to arrive at any durable end to the conflict; Still down nearly 1bn barrels in the most optimistic view of the supply outlook; and The split between “physical” and “paper” barrels (spoiler: it’s all backwardation!).

What Happened This Week

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Below the paywall you will find the latest monthly edition of the Commodity Context OPEC+ Data Deck (50-page PDF), tracking groupwide and member-level official production estimates, quotas, compliance, exports, and official production data reconciliation vs output implied by visible movements.

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• Quota participating OPEC+ crude production fell -7,587 kbpd m/m to 28,312 kbpd in March, according to official OPEC secondary source aggregate data. This is the second-largest monthly production decline on record behind only the emergency OPEC+ cut in May 2020. In addition, this marks a fresh, all-time crude production low for the expanded producer group and, for the original OPEC members, this represents the lowest aggregate crude output since Operation Desert Storm in 1990.

• Despite the announcement of a ceasefire, the Strait of Hormuz remains effectively closed (see chart above); talks between the US and Iran in Islamabad over the weekend failed to result in any agreement. In response, Trump announced that the US would be blockading Iranian exports through the Strait going forward, further choking what little flow was still managing to get through Hormuz to global markets.

[Full PDF Deck and additional analysis below paywall]

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Every week, I summarize and analyze developments in flat crude prices, calendar spreads, high-frequency inventories, refined products, and positioning data, as well as a taste of the themes I’ve been thinking about or following closely.

Also a reminder that paid subscribers can access the latest weekly update of the detailed 40-page PDF Market Positioning Data Deck at the bottom of this report.

This week I joined the Loonie Hour (Video) and Shift Key (Podcast), and you can also find more of my thoughts about the evolving situation in the New Statesman (Print) and on CBC Power & Politics (Video).

On the latest episode of Oil Ground Up, I was joined by John Love, CEO of USCF Investments to celebrate the 20th anniversary of the United States Oil Fund (USO), widely considered the largest oil exchange traded product (ETP). We discussed the record backwardation in WTI, volatility parallels to April 2020, and US producers remaining cautious due to the inability to lock in high spot prices on the back end of the futures curve.

If you’re already subscribed and/or appreciate the free chart and summary, hitting the LIKE button is one of the best ways to support my ongoing research.

Summary

Flat Prices collapsed by more than $14/bbl following the ceasefire announcement, marking the largest weekly decline since the start of the Iran War; Brent prompt futures (June delivery) are now sitting around $97/bbl while Dated Brent (spot) prices are sitting around $130/bbl after reaching an all-time high of $144.46/bbl on Tuesday, which outstripped the prior [nominal] all-time high set in 2008.

Timespreads pulled back sharply following the ceasefire announcement as prompt futures timespreads shed roughly half their backwardation; still, all major crude curves remain exceptionally backwardated and continue to scream for the release of any available inventories.

Inventories leaned bullish given a modest Stateside build and large draws across ARA Europe and Singapore; US crude stocks have reached high levels, concentrated around the US Gulf Coast, and are expected to begin drawing down more aggressively as empty tankers arrive to shuttle American barrels to Hormuz-starved importing regions; outside the US, inventory data is finally beginning to reflect mounting scarcity, especially of refined products.

Refined Products markets continue to signal that the greatest supply shortfalls are in middle distillates (i.e., diesel, gasoil, and jet fuel) but cracks did pull back notably after the ceasefire announcement (alongside crude); gasoline, meanwhile, remains relatively looser but crack spreads continued to climb despite the ceasefire news.

Market Positioning data revealed that speculators were small net sellers of crude futures and options contracts through Tuesday, though the sharp retracement of prices following the ceasefire—announced immediately after the end of the Commitments of Traders survey window—likely represents a considerable liquidation of what was excess speculative length.

As Well As Schrödinger’s ceasefire, the prospects for durable near-term peace in the Middle East, and what the future of the Strait and Gulf oil exports might look like.

What Happened This Week

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