Market Trends - Oil market surplus is emerging, which was anticipated by investors [1] - This surplus may drive down crude prices [1] Industry Expert Opinion - The boss of one of the world's top energy traders indicated the emerging surplus [1]

Oil Market Dynamics - The recent surge in oil prices mirrors the speed observed during the Russia-Ukraine conflict, with a 25% increase since May 5th [2] - Market is pricing in real fear about spare capacity, driving aggressive price moves [6] - Global oil market is tightening towards less spare capacity [7] - OPEC increase announcements are being taken bullishly, reducing Saudi and others' spare capacity [8] Spare Capacity & Geopolitical Risk - SPR drawdown limits its availability as an option [4] - Saudi Arabia and UAE possess significant spare capacity, estimated at 2 million and 1 million barrels respectively [5] - Additional spare capacity from Kuwait, Iran, and Iraq could amount to another 1 million barrels [5] - Potential Iranian attacks on Saudi facilities pose a risk of further price spikes [14] - Strait of Hormuz closure would trigger a major crisis [16] Production & Capex - Producers proactively cut capex early, with Saudi Arabia reducing rigs [11] - US production might drop year-on-year for the first time since the pandemic [12] - Saudi Arabia is preparing for downside by lowering their own capex [14] Sanctions & Geopolitics - Significant amounts of oil, about 1 million barrels a day, are going to China via Car Island [9] - The administration may be turning a blind eye to sanctions enforcement to maintain lower oil prices [9]