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Oil Market Snapshot – June 2022

  • The EU has agreed direct and secondary sanctions on Russian oil, pushing prices toward $120/bbl
  • We forecast global demand growth of 2.38 million b/d for 2022 (-260,000 b/d on previous), which would keep demand below 2019 levels for another year
  • China's lockdowns have hurt demand there, but pent-up demand may now add to a tight market in the high demand summer season
  • We forecast global supply growth of 3 million b/d in 2022 (-970,000 b/d on previous), with non-US non-OPEC production declining due to lost Russian production
  • We see Russia losing 2.8 million b/d by YE22, when the sanctions are fully in place, and few alternative sources of supply
  • OPEC+ has signalled continuing with the existing agreement, but there are rumours the group is considering an exemption for Russia
  • We consider this difficult to achieve by the meeting on 2nd June, but more plausible for later meetings
  • We see a deficit of 1.83 million b/d in 2022 (650,000 b/d larger than previous) leaving the market very tight and consumer countries hoping for the Iran deal to be resolved soon
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by Graham Walker // 1 June, 2022

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