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Oil market shifts from perceived glut to structural shortage, Jeff Currie says

Currie points to crack spreads surging to about $70 a barrel and to disrupted refinery capacity, including lower Russian processing since 2005 levels.

Reported · Written up by our desk · Energy

Carlyle Group Chief Strategy Officer Jeff Currie said the global oil market’s earlier perception of abundance has faded, arguing supplies have moved from a typical deficit into what he describes as a structural energy shortage, according to OilPrice.

Currie said the clearest sign of a shortage is in refined product markets, where crack spreads have jumped to an unprecedented $70 a barrel, a level he noted where the processing spread nearly matches the crude price itself.

He attributed a temporary sense of an oil glut to inventory drawdowns tied to releases from the Strategic Petroleum Reserves of International Energy Agency member countries, including a U.S. release of 172 million barrels from the SPR.

Currie also cited tightening fuel conditions from systemic bottlenecks, including volatile oil flows through the Strait of Hormuz and damage to Russian refineries, which he said has driven Russian crude processing to the lowest level since 2005 and removed more than 1.4 million barrels per day of refinery capacity from the market.

Latest closeWTI crude $79.00 ▼0.8%

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