Six months ago, the forward curve resembled a smooth sword shape, with prices starting at $78 in

the front month and declining to $68 five years out. Today, that curve has morphed into a hockey

stick, steep backwardation has set in. This change signals a key strategy by OPEC+; it isn’t bringing

all those barrels back and is preventing the market from sliding into contango.

How do you interpret Saudi Arabia raising its Official Selling Price to Asia?

It can do that partly because of how its barrels are allocated. Out of roughly 450, 000 b/d in preannouncement

production, 250, 000 wb/dent to domestic refining and crude burn. Only the

remainder has hit the international market. Domestic demand, especially for air conditioning during

Gulf summers, is substantial. OPEC is also watching refinery dynamics closely. Refinery runs peak

from May through August, then drop by around 1.5 million b/d into October, rise again briefly, and

fall once more during March–April maintenance. They’re unlikely to return more barrels to market

unless a major disruption arises, such as renewed sanctions on Russian-processed crude or ongoing

constraints in Iran and Venezuela.

How is the tariff scenario impacting China’s oil demand outlook?

Despite persistent concerns over tariffs and global trade tensions, both China and India have

navigated the landscape well. Demand hasn’t collapsed. China is expected to see modest growth of

around 200, 000 to 250, 000 b/d, and it’s slightly less for India. Still, the focus should be on crude

demand, not just end-user consumption. OPEC+ is trying to reset the narrative, raising ceilings to

remove negative sentiment around quota violations, not to flood the market.

Outlook for US production?

Even if the U.S. can increase production, there’s no strong pull from the market. That’s why we see

Trump asking China to buy more WTI in addition to Iranian oil. That tells you everything. It needs

demand from abroad, and that’s just not there. Global crude demand is projected to fall by 1.5 million

b/d from August to October. Without international pull, higher production alone won’t be enough.