We know what’s coming and we are prepared.
🛢 JP Morgan Warns Oil Market Out of Balance, Prices Must Rise
🔸The closure of the Strait of Hormuz, through which roughly 20% of the world’s oil flows, has removed 13.7 million barrels per day from global supply in April alone. A JP Morgan research note warns the market has no good way to replace it.
🔸Normally, spare production capacity in Saudi Arabia and the UAE acts as the market’s shock absorber. But that buffer has effectively been removed, eliminating the system’s first line of defense.
🔸With spare capacity unavailable, markets turned to inventories
➤ Global stockpiles are now being drained at ~7.1 mbd in April, an extraordinary pace, according to the note.
🔸Meanwhile, demand is collapsing because supply simply isn’t reaching users — “forced demand destruction.”The hardest hit sectors include:
▪️ Petrochemical plants across Asia are shutting down or slashing output as LPG, ethane, and naphtha flows from the Gulf collapse
▪️ Airline jet fuel costs account for 11% of total demand loss, with Middle East routes largely grounded and margins under pressure
🔸Even after accounting for falling demand and emergency reserve releases, JP Morgan says a gap of 2.3 million barrels per day remains with no clear fix.
🔸U.S. shale is the only large, flexible supply source left, but it can’t scale fast enough. JPM stresses shale needs 3–6 months for meaningful output gains, and 6–12 months for large increases. That’s too slow for a shock happening now.
🔸Brent prices diverged in April, with futures averaging about $99.7 per barrel while physical “dated Brent” rose to $121.6, signaling tighter real-world supply. The note concludes prices are high, but likely not high enough yet to fully reflect the shortage.
đź”— Dropsite
Meanwhile, here’s Don Jr. worshipping at the feet of another demon god in India.
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The village of Piddington has voted for independence from the United Kingdom and to become a self governing village in a landslide vote.
91% Voting Leave
This comes after news that over 3,000 illegal migrants are to be dumped in their village.
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🇺🇸🛢 The U.S. Strategic Petroleum Reserve has fallen to 283.8M barrels, its lowest level since October 1982.
A year ago, September 2025, the SPR held 406 million barrels.
The current drawdown traces back to a 172 million-barrel release President Trump authorized in March, part of a coordinated 400 million-barrel release by 32 IEA member countries. Discharge began about a week later and was expected to take roughly 120 days, with the administration pledging to refill about 200 million barrels within a year at no cost to taxpayers.
Two different floors govern how far the reserve can fall. Federal law sets an operational minimum of 252.4 million barrels, while the generally accepted operational minimum is 250 to 300 million barrels on hand to pump and process oil efficiently, a level it is now testing.
Ben Cahill, an energy analyst at the Atlantic Council, has warned the releases carry diminishing returns: "at a certain point it becomes a self-defeating move, because releasing more...
