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Oil Market Snapshot – July 2022

  • July starts with Brent trading c. $111/bbl, down $6/bbl against the start of June, after yet another volatile month as tight supply and recession concerns do battle
  • We forecast global demand growth of 2.33 million b/d for 2022 (-50,000 b/d on previous), which would keep demand below 2019 levels for another year
  • China's lockdowns continue to hamper demand, but the country is stocking up on discounted Russian crude, while US demand growth slows as inflation hits a 40 year high
  • We forecast global supply growth of 3.5 million b/d in 2022 (+500,000 b/d on previous), recalibrating Russian production upward due to weakening efficacy of Western sanctions
  • Russian production has reportedly recovered to c. 9.8 million b/d, though it remains to be seen how temporary this is
  • Major outages in Libya and Ecuador take 850,000 b/d off the market, while Saudi increases fail to keep pace with quotas
  • OPEC+ will end its current quotas a month early, and will now have to negotiate its next phase as soon as 3rd August
  • It will be a tricky negotiation for Saudi Arabia, as the Kingdom attempts to steer between its...

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by Graham Walker // 2 July, 2022

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