Oil Markets Are Near a Breaking Point

(00:00.458)

Okay, I’m gonna give everyone an insider’s view what’s happening right now in oil markets. a few months ago, there was a report that came out by JP Morgan. it was entitled, How Long Before the World Hits Crude Oil Operational Minimum? there was a story about this. they were talking about the punchline was that the market can hold hundreds of millions of barrels.

It would still become fragile once working stocks fell too low. It’s like blood pressure in the human body. The issue is circulation. again, there was a another report that came out explaining why the Gulf will reopen by September one way or another. they calculated that of the 8.4 billion barrels in global oil inventories at the start of 2026, only 0.8 billion.

were realistically available without pushing the system into operational stress. where we’re at right now as far as inventories are coming down.

This is the CEO of Chevron, Mike Worth, warned that oil prices are likely to rise over the next two months, as already near record low crude inventories continue to decline due to the war. And I quote: the buffers and the shock absorbers are being steadily drawn down, and the ability for the market to absorb this balance is drastically diminished today versus where we started.

Over the next few weeks, we’re likely to see those pressures flow through more directly to physical prices. And there’s more upward pressure that I would expect as we get into June and certainly into July. again, there’s been some optimism in regards to what’s taking place. You know, we shall see. they’re saying that it’s gonna take at least four months.

(02:09.674)

once everything is open to get back to eighty percent of pre-conflict flows and full flows will not return before the first or even second quarter of twenty twenty-seven. So again, people continue to consume, they continue to use it. The production is not the same. Prices are going to remain elevated supply and demand. a little bit more. This is from the CO Exxon.

Commercial inventories of crude oil of liquids, think petroleum, gasoline, diesel, jet fuel, they’ve all run down. And running down those inventories has mitigated offsets, supplemented by the release of strategic petroleum reserves. That’s something that we have been doing. We’ve been releasing, we I mean, we should have filled a strategic petroleum reserve, but we’re even selling more. And it’s not staying here in this country. We are shipping this to Asia to help calm markets.

All of that has mitigated the impact. You can model this. We’ve modeled it. I think a lot of people in this industry have modeled it. We’re approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see the price shoot up. I mean, I think dated Brent, most people well, a model.

Would say dated Brent will shoot up once you get to that really low inventory, up to 150 to 160. The models would tell you that. And then what happens is when the price gets to a certain level, demand destruction brings it back into balance. Prices go so high, it becomes affordable, and that’s what happens. So we’re at that level right now. So this is a CEO of Exxon. Now, this is public knowledge. I’m gonna throw in the

issues we have right now in negotiating with Iran, they know this. They’re they’re well aware of this. again, making our negotiating point very much much more difficult, quite frankly. you get these prices shoot up. You like I said, you get that type of demand destruction. That means the economy global economy would significantly

(04:33.868)

weaken. And Ike I talked about, you’re talking global recession or global depression. This is just the reality, people. These are the just the numbers. This is the importance of whether this memorandum of understanding, this is why they’re really pushing for that 60 day 60 day stop so stuff can start getting through to alleviate some of the pressure that is being brought to bear. Watchdog on Wall Street.

Dot com