Oil market reactions rarely lead to supply shocks, Rory Johnston warns

Oil market reactions rarely lead to supply shocks, Rory Johnston warns
Oil market overreacts to risk spikes

Rory Johnston observes that the oil market has tended to overreact to geopolitical risks throughout his career, with these risks rarely materializing into actual supply shocks.

He notes that beginning the year with an oversupplied oil market provided some buffer, but still finds it unusual to witness the current market response.

Earlier this year, Johnston discussed how market fears of conflict in the Gulf led to precautionary buying and a March rally in oil prices. He previously reported Brent futures standing at $103 per barrel as the market faced a record supply deficit, with Dated Brent quoted at $105 per barrel during that period. These episodes highlight the market’s tendency toward sharp reactions on both supply and demand signals.

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