Goldman Sachs said that strong crude exports outside the Gulf and subdued demand from China are helping to partially offset market tightening caused by very low Gulf exports.
Goldman Sachs said in a note dated Thursday that 45% of the hit to Persian Gulf crude/condensate exports is being offset, primarily by increased exports from the Americas, but there is no net offset to the decline in refined products exports.
It highlighted that an increase in exports does not equate to higher production, as the volumes being exported could be sourced from inventory draws, as seen in the United States.
U.S. crude and fuel inventories continued to draw down last week as countries around the globe scrambled to fill supply gaps caused by disruptions from the war with Iran, the Energy Information Administration said on Wednesday.
“On the demand side, weakness appears mostly concentrated in China, jet fuel, and petrochemical feedstocks, while measured ex China road transportation demand remains mostly resilient,” the note added.
In the latest development, the United States and Iran are edging toward a temporary agreement to halt their war, sources and officials said.
Oil supplies are set to tighten further in coming weeks even if the U.S. and Iran agree on a peace deal to end their war because it will take weeks for oil shipments to resume from the Middle East Gulf and reach refiners worldwide.
(Reporting by Ashitha Shivaprasad in Bengaluru;Editing by Elaine Hardcastle)