Crude oil: The expectation of supply shortage is difficult to falsify and continues to rise

In the past week, the crude oil market has been turbulent, and the geopolitical impact on oil prices has reached a fever pitch in nearly a year
.
We maintain our previous judgment that while the short-term volatility of oil prices is intensifying, the upside risk of the trend has not been lifted for the time being, and it is still possible to continue to reach new highs
.
As we said earlier, the most important factor at present is that Russian crude oil exports have been substantially affected
.
This benefit has nothing to do with whether Russia is subject to energy sanctions, the essence is the collapse
of the security system of the Black Sea Route under the war in Ukraine.
This logic has been repeatedly verified in the past week, and as the Russia-Ukraine negotiations have stalled, the market has become more pessimistic
about the adverse impact of the Russian crude oil supply cut on global crude oil inventories.
Considering that even if the supply increase brought by Iranian crude oil is about 600,000-800,000 barrels / day, it is temporarily unable to make up for the loss of Russian crude oil exports, and the gap on the supply side of the global crude oil market cannot be falsified
for the time being.
In addition, on the evening of March 2, 2022, Beijing time, OPEC+ reached a consensus at the OPEC+ meeting held in early March to maintain the plan
to increase production by 400,000 b/d.
On the surface, maintaining the production increase plan means that member countries are willing to expand supply, which is an important negative
for the crude oil market.
But in fact, since most of the OPEC members have long exhausted their production capacity, but the United Arab Emirates, Iraq and even Saudi Arabia have a certain amount of spare capacity, maintaining the original production increase plan means that these countries with spare capacity will also follow the OPEC+ production increase quota to increase production, which has been fully priced
in the market.
Therefore, maintaining the 400,000 b/d production increase effectively means that OPEC+ real supply will remain at a tight level
.
Therefore, the only way to solve the supply-side gap in the current market is the recovery
of Russian crude oil itself.
The short-term supply-side gap-driven oil price rally may be difficult to end
until Russian crude exports recover.
In the long run, the reversal of the positive supply and demand side may stem from two factors: the return of shale oil supply in the United States, the global recession, and the sharp rise of the dollar index
.
For the first two negative factors, short-term cashing is unlikely
.
For the third negative factor, the recent continuous rise of the dollar index does not rule out a phased adjustment
of oil prices in the future.
However, considering that the high inflation in the United States may remain for a long time, as well as the constraints of long-term and short-term interest rate differentials, the upside of the dollar index is doubtful, and it is recommended to continue to pay attention
.

Overall, the global crude oil market is not the first time in history to experience capacity bottlenecks, except for the two energy crises in the 70s of the 20th century, the most recent supply shortage in the crude oil market appeared in
2007-2013.
During this period, although the price collapse under the financial crisis, strong economic growth has led to a rapid recovery in demand since then, and the two external oil plates have remained at a high level
of $100 / barrel for three consecutive years.
Compared with that time, the current crude oil market is still in the middle of the expected supply gap, and before this positive can not be falsified, oil prices theoretically have a basis for
sustained short-term growth.