Oil: Tightness turning critical – Societe Generale
Societe Generale strategists Michael Haigh and Jeremy Sellem argue that global Oil product markets have shifted from tight to critical. They link East-West pipeline disruptions, Russian outages, elevated freight and low inventories to structurally constrained supply. They highlight exceptionally high refining margins, stressed crude and product balances, and warns that current conditions leave little buffer against further shocks. Global product balances under strain “This weeks CCA examines the growing evidence of tightening global oil product markets. We assess the implications of the recent East-West pipeline disruption, worsening Russian refinery outages, and the increasing disconnect between crude oil and diesel markets as exceptional product tightness drives product prices higher. We also explore the sharp rise in freight rates, now up by an order of magnitude of tenfold in some key routes, and how these costs are increasingly feeding through to end-user prices.” “Finally, through a series of charts, we present the anatomy of product market tightness, showing declining inventories, weaker exports, lower refinery supply, and rising refinery outages, all pointing to an increasingly constrained global market. Refining margins are extremely high reflecting the need for products.” “Taken together, the charts suggest that product markets remain structurally tight. The persistence of margins well above historical averages
