How will the market cope with the loss of Russian Crude?The growing spread between WTI and Brent creates an arbitrage opportunity that will will cause more US exports, and less imports, which will lower US inventories during a season where crude and products normlly build.
The loss of Russian crude from the market is causing a drop in supply, and higher prices.
Refineries are shying away from all Russian oil, and cancelling cargos. BP is abandoning it's Russian oil investment with Rosneft, and Shell is being pressured to do the same. So how will we get through this crunch?
We now need all of these options at the same time just to acheive market balance and maintain current supply levels, otherwise the sky's the limit to the price of oil:
- An Iran deal would add 1m bbls
- Immediate maximum production of all remaining Opec producers capable of increasing production: Saudi +700 kbpd, Kuwait +300, UAE +450
- coordinated SPR releases + 500kbpd
- Additional exports to China and India: 1mbpd
- Demand destruction due to higher oil prices -500 kbpd
I am expectiing and prepared for some more volatile days to come, with an upward bias. One can do well on it by keeping stops. IMO, it is not the time to be on the sidelines. The present geopolitical situation now is an incredible opportunity and a gift. Play it.
I did sell about half of my $90 long WTI positions this morning around $95.50 to book profits from Friday, and will reload if it retraces, but am still holding a heavy 7 figure position in HOU.TO as a trade.
If this supply scenario unfolds, SU should be free to run up with all the other producers regardless of what the indexes do.
Cheers all.
