Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **oil market**, highlighting geopolitical supply risks and inventory dynamics affecting prices and demand. Core Insights - **Price Trends**: Dated Brent has increased by approximately **$5/bbl** year-to-date due to geopolitical supply risks, particularly unrest in Iran and renewed attacks related to Russia/Ukraine [12][7]. - **Supply Disruptions**: Drone attacks have led to a **0.5 mb/d** reduction in exports from the CPC terminal, contributing to tightness in the Atlantic Basin [17][12]. - **Global Inventories**: There was a significant build in global inventories in **2025**, with expectations for further acceleration in the first half of **2026**. Atlantic Basin stocks are lagging but will need to absorb surplus, pushing Brent prices into the **high-$50s** [12][12]. - **Demand Growth**: Total oil liquids demand rose by approximately **0.85 mb/d** in **2025** and is expected to grow similarly in **2026**, which is below the historical trend of **~1.2 mb/d** due to below-trend GDP growth [12][12]. - **Non-OPEC Supply**: Non-OPEC crude and condensate supply grew by about **1.2 mb/d** on average in **2025**, with a projected **0.6 mb/d** year-over-year growth in **2026** [12][12]. - **OPEC Production**: OPEC's Group-of-8 has unwound **2.9 mb/d** of cuts since March, but actual output has only increased by **0.5 mb/d**, indicating diminishing effective spare capacity [12][12]. - **Surplus Projections**: The analysis indicates a **1.9 mb/d** surplus in **2026**, peaking at **2.7 mb/d** in the first half of the year, necessitating a contango term structure to clear into storage [12][12]. Additional Insights - **China's Inventory**: Satellite data suggests a **70 mb** inventory increase in China year-on-year, but actual flows may indicate a discrepancy of about **80 mb** [31][12]. - **Geopolitical Factors**: The ongoing geopolitical tensions, particularly involving Iran and Russia, are creating demand for alternative crude sources, despite weak off-take from sanctioned crudes [23][12]. - **Long-term Outlook**: The oil market is expected to remain in surplus through **2026** and most of **2027**, with declining exploration success rates posing long-term sustainability concerns [57][62]. - **Price Dynamics**: The forward curve is likely to shift into contango, requiring spot prices to be in the **high-$50s** to make storage economically viable [46][12]. Demand Insights - **Regional Demand**: Demand growth is primarily driven by LPG/ethane and jet fuel, with Asia, the Middle East, and Latin America being crucial growth regions [120][123]. - **China's Recovery**: China's oil demand is recovering modestly, driven by petrochemical feedstock and jet fuel, rather than gasoline and diesel [130][12]. - **European Demand**: European demand in June exceeded the IEA's initial forecast by approximately **120 kb/d** [135][12]. Supply Insights - **Non-OPEC Growth**: Non-OPEC supply growth is expected to slow to about **860 kb/d** in **2026**, influenced by high production exit rates from **2025** [163][12]. - **Key Producers**: Growth in non-OPEC supply is driven by several key countries, while smaller producers are experiencing declines [165][12]. This summary encapsulates the critical points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the oil market.

Group 1: Market Outlook - The global oil market is expected to tighten in the medium to long term despite a near-term surplus driven by rising output [1] - The International Energy Agency (IEA) projects a surplus of 3.6 million barrels per day in Q4, compared to an average of 1.9 million bpd for the year [2] - Oil prices are currently under pressure, with Brent futures trading around $62 per barrel, down over $15 from the same day last year [2] Group 2: Production Dynamics - Oil production from non-OPEC producers is anticipated to decline if prices fall to $60 per barrel, according to TotalEnergies CEO [3] - ExxonMobil CEO indicated that decline rates could reach 15% per year without investment in unconventional oil and gas fields, viewing oversupply as a short-term issue [4] - ConocoPhillips CEO highlighted the challenge of meeting growing demand with plateauing U.S. unconventional supply, suggesting oil prices could recover to $70-75 per barrel [5] Group 3: Demand and Investment - There is a resilient demand for oil, necessitating long-term investments in supply, as emphasized by Saudi Aramco CEO [4] - The industry executives maintain a bullish outlook on medium-term demand, supported by consumption growth from emerging economies [1][3]