Oil Narrative
Market Overview
Iran war not finding any quick resolution, with the two-week ceasefire beginning 8 April not culminating into successful peace talks.
ICE Brent within 95-105$/bbl range, but volatile swings mark difficulty in trading to reactive news.
ICE Brent and Nymex WTI futures have been fairly muted, given the scale of disruption that we are seeing in the markets. An outright 10-11 mbd of crude have already been shut in and will take time to recover.
However the physical markets have been screaming of supply shortages. DFL was at +14$/bbl, Murban premium vs Dubai hit a high of +53$/bbl in March trading.
Recovery Outlook
Timeline extends Gulf infrastructure damage requires significant repair (refineries, pipelines, terminals).
Shut-in fields face reservoir complications on restart after prolonged closure.
Lingering war risk insurance restrictions keep some vessels away from the region.
Conflict leaves security uncertainty that delays crew and ship owner confidence.
Estimated minimum: 1–2 months upstream · 2 months refining · 3 months petrochemicals.
Jet fuel was the hardest hit at the start. No alternatives for production and no strategic storage. Some airlines are forced to induce demand destruction.
Next came diesel - the workhorse of the barrel, and with refining runs lower in Asia plus less medium sour crudes producing less gasoil yields going forward, diesel is facing a massive shortfall.
Mogas, particularly higher octane barrels are pricing up. Europe had plenty of inventory in the prompt but watch out for summer.
Naphtha + LPG availability into the key Asian petrochemical sector is scarce, leading to multiple force majeures.
Fuel oil supply imbalances in the key Singapore blending hub will start to come in April. Lower refinery runrates with more lighter crudes essentially reduces fuel oil production.
