Asia Pacific FDI Network

Hormuz transports ~20mbd. Where do barrels come from in the short run? • Floating storage • Existing Middle East pipelines • SPR releases (especially China) • Ships already in transit (~3 weeks already sailing) • Inventory drawdowns / delayed purchases • Modest demand reductions (mostly EM) Basic math: Ships already in transit + floating storage ~6–8mbd (temporary) ME bypass pipelines ~3–5mbd excess capacity SPR releases + inventory drawdowns ~3–5mbd (temporary) Demand destruction ~2–3mbd (as long as prices remain high) Total short-run buffers: ~14–21mbd The oil market doesn’t need to replace all 20mbd immediately — it just needs to close the marginal imbalance until flows normalize.

Market figured out oil transits to Asia (China, India, Japan) are starting to flow

The EU and China held their second export controls dialogue today in Beijing. EU represented by top trade enforcer Denis Redonnet Per Mofcom, they agreed to "continue maintaining contacts and exchanges, as well as to promote the stability and smooth operation of supply chains"

Larry: Are you becoming chartist? 😀(I kind of remember that something happened at the end of the 1970s, like a trippling of oil prices, which might be vaguely relevant. Do u expect it to happen again?)

The oil market is already tapping the SPR. No, no that SPR. I mean the Russian (and some Iranian) floating barrels that, effectively, are acting as the market's first line of defence. If anything, their impact is faster than the SPR, because they are already in tankers.