Everyone has an opinion on peak oil demand. IEA and OPEC are at loggerheads. Markets are divided as to which version of the future to believe, attempt to price, and invest in.

A long 🧵 about peak oil demand and why regardless of when oil "peaks", the demand reckoning is coming First, the analysis framework needs to change.
The way we think about peak demand – laser-like focus on the year that demand peaks – is inherently flawed.
Peak demand is not a singular event before a sharp decline, as @javierblas wrote a few weeks back.

https://x.com/JavierBlas/status/1706193756934799585?s=20

The “inevitable” underinvestment bull thesis for oil hinges on the lack of investment in new production and assumes the path of mature/existing production as mostly set in stone. It’s not.

A long🧵about the (in)famous “base decline” and why it matters #OOTT Short version: The price reflation (if sustained) can and likely will lift medium-term oil supply by shoring up spending on existing production. Over a 5-yr horizon, shallower base declines could “add” 1-2 mb/d of supply without a single additional project.

If the fracturing of the oil market in 2022 played out in Moscow, Brussels, Washington, and Riyadh, all roads for oil markets in 2023 and beyond lead to Beijing.

How did China stumble into becoming the regulator of global oil markets? A thread 🧵

#OOTT China has never fashioned itself, at least publicly, as a particularly willing regulator of global oil markets.

It has never had grandiose strategic aspirations of managing oil markets beyond its own energy security and diversification priorities

For oil markets, it’s fair to say that 2022 has been one for the history books. Price/volume swings and government interventions at a scale and frequency we've never seen before.

Mega year-end thread of the 22 key oil numbers of 2022. #OOTT #oil #OPEC This list could have been much longer (!) and some events have multiple key numbers that would have been worth highlighting, but wanted to keep a good mix across prices and paper markets, fundamentals (S/D), geopolitics, refining and trade flows.

So here goes...

The oil market has always searched for price "anchors" to help frame the #oil price band or price "regime". Prices at which something balance-altering happens.

We've never had as many anchors as we have now, let alone overlapping.

A brief summary... #OOTT Pre-shale (Pre-2014) there were two anchors:
- The OPEC/Saudi "put" (floor): price at which OPEC is willing to cut production to support prices
- Demand destruction (ceiling): price at which demand forcefully adjusts

Broadly defined post-GFC this was thought of as $80-$120

Good points but a few comments:

1- It may feel like oil has been in a frenzy forever but by oil investment standards, it has been an exceedingly short time to judge spending inertia by... The invisible hand of the oil market always works faster for demand than supply.

#OOTT

https://twitter.com/JavierBlas/status/1587712456134115328

2- Most major oil companies rarely make strategic shifts mid-year unless their hands are forced, usually by a price collapse. Oil companies are creatures of the annual planning cycle. The test is coming soon with a different price environment and a new energy security mandate.

Why is #OPEC so worried about the price cap?

Short answer: it's not about the specifics of this proposal, which is trying to add a back door to a disruptive EU sanctions regime. It’s about what a price cap mechanism (even imperfect) would *mean*.

A thread 👇🧵

#OOTT An effective price cap would provide large consumers (i.e. the West) with a functional and tested foreign policy tool that fundamentally changes the leverage balance that has defined oil markets for decades.

Longer answer below

Russia-EU oil: With the EU ban approaching fast, why are markets seemingly ignoring dislocation risks?

A short thread🧵
#OOTT Over the next four months, the market needs to re-route 2x more oil than what happened so far this year, without the relief valves that made the first salvo of the rewiring easier (SPR, China import drop, Gulf increases, looser tanker mkt, India headroom and no sanctions).