We have been hovering in a $75-90 range for quite some time.

We’ve seen some tentative signs pushing a bit higher in the past couple of weeks, so an $85-90 range seems reasonable and defensible. However, going beyond that seems doubtful for now. The main factors remain well balanced. Geopolitical concerns persist, but the market largely discounts them, showing little worry. Demand has picked up somewhat, but it remains patchy depending on the region.

Are western sanctions on Russia having any greater impact this year?

Each sanction has a temporary effect, with the Russians usually finding ways to work around them. A few months ago, they faced significant disruptions in India, with tankers queued up but this was eventually resolved. Other factors include Ukrainian attacks on Russian refineries, temporarily reducing capacity. So far, the impact on refinery operations has been limited, but ongoing Ukrainian actions could potentially prolong and complicate repairs. Sanctions have affected Russia’s financial and foreign exchange markets more than its oil exports, which have only slightly decreased due to seasonal factors and enhanced OPEC compliance. A critical development to monitor is Denmark’s tightening of tanker compliance with sanctions and insurance regulations, particularly concerning Russian exports via the Baltic Sea. Safety concerns in the Danish straits could lead to more restrictions on those vessels, potentially disrupting flows significantly.

Are demand scenarios by OPEC+ realistic given China’s demand outlook?

OPEC’s decision to gradually reintroduce oil into the market offers stability but also the flexibility to adjust production based on market conditions. This approach caps oil prices both on the upside and downside. If Chinese demand exceeds expectations, production could be accelerated. The Chinese demand outlook is a mixed picture, while the US market mirrors a similar pattern with robust aviation fuel demand but weaker diesel sales. Europe faces notable weakness, especially in gasoil. OPEC’s current aggressive demand projections have yet to shift, but there is growing anticipation that it may need to revise these forecasts downward in the near future.