Will OPEC+ Supply Increases Overwhelm Demand?
The production boost signals OPEC+ confidence in demand recovery, but raises questions about market absorption capacity. “The report about an OPEC increase came out and prices cratered,” said Phil Flynn, senior market analyst with Price Futures Group, describing Friday’s midday selloff.
China’s Iranian oil imports surged to a record 1.8 million barrels per day from June 1-20, according to ship-tracker Vortexa. As the world’s top oil importer, China’s accelerated purchases before the Israel-Iran conflict highlight underlying demand strength despite price weakness.
Can Inventory Draws Support Prices?
Multiple bullish inventory signals emerged this week. U.S. government data showed crude oil and fuel inventories fell with rising refining activity and demand. Independently held gasoil stocks at the Amsterdam-Rotterdam-Antwerp hub dropped to their lowest in over a year, while Singapore’s middle distillates inventories declined as net exports climbed.
“We’re getting a demand premium on oil,” Flynn noted, pointing to expectations of higher consumption in coming months. These inventory draws provided early session support before OPEC+ news dominated headlines.
Has the Geopolitical Risk Premium Disappeared?
The 12-day Israel-Iran war that began June 13 initially pushed Brent above $80 as markets priced in supply disruption risks. President Trump’s ceasefire announcement eliminated these premiums almost overnight, demonstrating oil’s sensitivity to headline risk.
“The market has almost entirely shrugged off the geopolitical risk premiums from almost a week ago as we return to a fundamentals-driven market,” said Rystad analyst Janiv Shah.
