When the oil trading community descended on London for its annual International Energy Week jamboree last week, the bears outnumbered the bulls, probably by three-to-one. They fought about supply. They argued about demand. But, above all, they clashed to control the market’s narrative. Eventually, the bears prevailed — just.
In commodity markets, vibe often matters more than spreadsheets. Ibrahim Al-Muhanna, who shaped Saudi-speak for decades as a senior aide to several of the kingdom’s oil ministers, wrote in his memoirs that at times of crisis or uncertainty, “sentiment overshadows fundamentals.” We’re in one of those unsettled periods, with few traders having a strong conviction about how many barrels of crude the world will produce by mid-year. Get a potential war or a peace negotiation wrong in the calculus, and wave goodbye to a year’s worth of P&L.
For two years, the bears have had the microphone, shouting the obvious: Oil supply is running well ahead of demand, and thus global inventories are increasing, albeit from a low level. Last year, global stocks increased by about 477 million barrels, equal to 1.3 million barrels a day, thanks to higher production from the likes of the US, Brazil and the OPEC+ cartel, according to the International Energy Agency. The problem isn’t annual demand growth, which remains healthy at close to 1 million barrels a day, but too much output.
The stockpiling has continued in early 2026, according to preliminary data, but the bears concede that inventories haven’t grown as much as expected, in part due to supply outages. In January, global production fell by more than 1 million barrels after a cold blast dented output in the US and Canada, and a fire disrupted a giant oilfield in Kazakhstan.
But here’s where the vibe shifts. At last week’s shindig, the bulls pointed out that there are surpluses — and surpluses. Where much of the current stockpiling is happening matters relatively little for oil prices: in China’s strategic petroleum reserves, and in the shadows of the black market for sanctioned barrels from Russia and Iran.
Russell Hardy, the head of Geneva-based oil trading giant Vitol Group, told attendees that he saw an “enormous amount” of sanctioned barrels unable to find a buyer. In the last two months, Russia has loaded about 40 million barrels that the country has been unable to sell onto tankers. The barrels are “just sitting on the high seas,” Hardy said, “waiting to find a home.”
So while the bears are yelling, “Don’t you see it, there are oil barrels everywhere?” the bulls are whispering, “Is an oil surplus that isn’t readily available to the wider market really a surplus?” — and those whispers are getting louder.
China added more than 100 million barrels into its strategic storage last year, accounting for roughly a quarter of the global inventory build-up. Will those additions continue? Lots of people have opinions but I don’t think anyone, other than perhaps the top oil traders at Chinese state-owned companies, knows for sure. What’s clear, as Alex Grant, the head of oil trading at Norwegian giant Equinor ASA, put it is that “if they just decided to stop tomorrow, my God, the world would be awash with oil.” That’s the bearish argument. But even if China continues to increase its reserves for a second consecutive year, as the bulls anticipate, millions of surplus barrels will land in storage tanks without having much of an impact on the price of Brent, Dubai and West Texas Intermediate, the world’s main petroleum benchmarks.
The second issue is Russian and Iranian barrels — and geopolitics. Here, it’s all about what President Donald Trump, President Vladimir Putin, President Volodymyr Zelenskyy and Ayatollah Ali Khamenei do. Geopolitical consultants spent the week in London offering their oil-trading clients odds about the likelihood of a US attack on Iran, war in the Middle East or a peace deal between Moscow and Kyiv. Ultimately, traders need to make educated guesses — based purely on vibe.
The bulls contend that sooner or later Russia — and perhaps even Iran — will have to cut production, tightening the global market. And those barrels on the high seas may remain unsold, and therefore should not be counted as surplus. The bears argue the opposite: Sooner or later, perhaps via significant discounts, the barrels will find a home — most likely in China. And if the geopolitical tensions between the US and Iran or Russia and Ukraine ease, more oil can flow into the global market, widening the surplus. The bears have a strong argument: Trump dislikes high oil prices and he faces mid-term elections later this year.
Right now, the vibe is split: momentum is with the oil pessimists, but geopolitics favors the optimists. Clearly, the world is producing more oil than it’s consuming. The key is whether that surplus arrives where it can influence crude benchmarks. For now, oil prices are neither crashing nor mooning. Brent has been sulking in a $60-to-$70 range for six months, waiting for the next catalyst to tip the scales. My money? The surpluses will start showing up in April and May in the Atlantic Basin, where they’ll have a larger impact on benchmark prices. For now, the bears are winning both the spreadsheet calculus — and the vibe war.
But the bulls may triumph if the geopolitics of conflict bail them out. The skew of risks also favors the bulls: At current Brent prices of around $67 a barrel the downside is limited to a decline of, say, $10-$15; but the upside, if a war erupts between Iran and the US, is virtually uncapped — a doubling to $125 is a clear possibility if things go truly wrong in the Middle East. Being a bear isn’t without its dangers.
