TD Securities forecasts 1bn barrels in production losses and 800m barrel inventory draws by November, tightening balances even with a deal.
Oil markets are poised for significant tightening this summer, with projected production losses of 1bn barrels and inventory draws of 800m barrels between June and November. The deficits are expected to peak in July, even if a comprehensive deal fully reopens the Strait of Hormuz, due to logistical delays and lags in restoring production.
The analysis suggests that while an open Hormuz would ease pressure after August, the damage to market balances may already be done by then. Prior projections assumed a gradual rebalancing, but current fundamentals indicate a sharper drawdown in inventories, regardless of geopolitical developments.
Market reaction remains cautious, as traders weigh the potential for delayed relief against near-term supply constraints. The outlook underscores persistent risks to oil balances despite optimistic scenarios for Middle East flows.