The oil market has shifted from concerns of a surplus to fears of a deficit due to factors such as sanctions and increased demand.
Just a month ago, the dominant narrative in energy news sections was one of surplus supply and consistently weak Chinese demand. Now, some are starting to talk about a deficit, especially after the Biden administration's farewell sanction package aimed at Russia. John Kemp wrote a column about the state of global supply earlier this month, noting that 'U.S. crude oil inventories have depleted much faster than normal since the middle of 2024.
The standard story is that non-OPEC supply, led by the United States, would surge so much this year that it would completely offset the continuing OPEC cuts and keep the world oversupplied. The fact that U.S. oil majors have signaled multiple times that they have no intention to do anything of the sort remains largely ignored by analystsbut not by oil traders.
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