Group 1 - Oil markets are experiencing a disconnect between geopolitical influences and fundamental physical signals, leading to a situation where Brent spreads and gasoil cracks appear strong on paper, while North Sea grades struggle for premiums and US crude arrives at a discount in Europe [1] - The market is characterized by a split screen, with futures indicating some tightness, while the physical market shows marked weakness, evidenced by the solidified backwardation in paper structure and traders adding security cushions due to strikes on Russian refineries [1][2] - Despite robust summer runs and increased crude processing in countries like Saudi Arabia and Brazil, margins have not collapsed, suggesting that operable capacity is nearing its ceiling [2][3] Group 2 - Refining flexibility is identified as the critical pinch point rather than crude availability, with global conversion units operating near practical limits and reliability being uneven [3] - The current disconnect between paper and physical markets is not sustainable, as North Sea physical weakness contrasts with backwardated Brent spreads, indicating that either physical premiums must rebuild or paper structure should cool [4] - Global crude exports are at multi-year highs, and the market anticipates a better-supplied period in Q4, raising questions about timing and the management of geopolitical risks in the paper market [4]