James Campion @campervans: "GS | "Oil: Severe Supply..."

United Arab Emirates

GS | "Oil: Severe Supply Shock Meets Accelerating Demand Destruction" Goldman Sachs sees the oil market's extreme physical tightness being capped by significant, accelerating demand destruction. The recent drop to $ 95/bbl on truce talks underscores how fragile the war premium is, especially with the IEA's stark new demand warnings creating a clear headwind. SUPPLY DISRUPTION REMAINS SEVERE • Physical flows through the Strait of Hormuz are still just 10% of normal, holding at a minimal 2.1mb/d (4-day moving average). • A new US blockade on Iranian port traffic adds further downside risk to these already depressed volumes. DEMAND DESTRUCTION IS ACCELERATING • The IEA just slashed its April demand forecast by a stunning 3.0mb/d versus its pre-conflict expectation. • For the full year, the agency cut its 2026 demand growth forecast by 0.9mb/d, now projecting a slight annual decline. This is a material shift. MARKET IMPLICATIONS • The pace of global visible inventory draws has slowed sharply from -7mb/d to just -2mb/d over the past week, supporting the weakening consumption narrative. • Ceasefire hopes (an 81% probability of a deal by month-end on Polymarket) are compressing the front-end risk premium. This aligns with GS's forecast for Brent to average $ 83 in 2026, well below current spot prices. Monitoring the $USO (United States Oil Fund) short closely Source: Goldman Sachs | Finvaulta $OIL $USO $BRNT.L (WisdomTree Brent Crude Oil) $OIL.24-7

Not investment advice. The author may have financial interests in the mentioned instruments.