How Fast Will Gulf Production Recover After Reopening

Last night, we published a must read report by JPMorgan which "did the math" on the ongoing Gulf blockade which two months after the war started, has kept oil traffic out of Gulf largely frozen. JPM's chief commodity strategist Natasha Kaneva found that "if roughly 14 mbd of supply has been removed, and even assuming an aggressive 8 mbd contribution from inventory draws, the market would still need to clear an additional 2 mbd through lower demand or through even larger inventory draws." The conclusion was that prices - first for product and then for everything else - needs to rise substantially before the market is in equilibrium.