RE: From an article in oilprice.com28 Mar 2026 09:43
Meoryou, very well put. I had mentioned the limitations on price existing very early on.
The following factors are at play:
Existing oversupply that was forecast to grow. The over supply was between 2-4m bpd, even with sanctions on the second biggest exporter, Russia. This was forecast to go up to 5m bpd.
Strategic reserves were very high for Asia's biggest consumer of gulf exports, China. They are still getting some exports through and can safely draw down on reserves accumulated.
A slowing of the Asian economies that consume the most oil, namely China and India.
A weak global demand environment, not like the post-covid environment.
A long-term trend of diversifying away from fossil fuels. Europe has reduced its dependency significantly on fossil fuels and is continuing to do so. China wishes to do the same. The technology is now there to replace direct inputs of gas for some of the most energy-intensive production processes with electric means. Of course, the energy still needs to be generated and some of that may come from gas, but it is not necessary that it does.
As you say, ongoing deliveries are still coming in.
The release of reserves will ensure physical shortages don't occur for some time.
The fact of the matter is that rationing of energy among poorer Asian economies is because bidding up the price of these things is not in their interests as they will be outbid by richer countries. Interestingly a lot of airlines have refused to buy significant futures volumes as they seem the rates to be reflective of speculative fear. If you look at the further dates futures for gas they are very cheap, so 2027 stuff.
The only thing that's kept oil above 60-70 is this war. But there is this war.
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