According to a research report, the market has fully priced in a supply recovery, and with the recent rapid decline in oil prices, the market structure in Q3 is expected to remain in a state of inventory drawdown, making it more prone to price increases than declines. Potential catalysts for a rebound include: (1) the market has already fully priced in expectations for the resumption of shipping routes; any slower-than-anticipated progress in supply restoration could easily trigger a rebound; (2) shipowners require time to redeploy vessel capacity and upstream oil fields need time to resume production; (3) the arrival of the traditional peak demand season coincides with low refined product inventories in many regions; (4) previous buffer measures may change, including the nearing end of IEA strategic stockpile releases and the normalization of China's crude oil imports back to regular volumes. With the recent oil price decline, it is recommended to focus on leading companies in the polyester and petrochemical refining sectors, where cost and demand pressures are expected to ease, leading to potential improvements in industry conditions. The main viewpoints are outlined as follows:
Supply Side: Q3 Supply Forecasts Revised Upward
Based on forecasts from the IEA and EIA, global total crude oil supply for 2026 is projected at 102.6 and 101.9 million barrels per day (mb/d), respectively, representing year-on-year decreases of 3.7 mb/d and 4.2 mb/d. These figures have been adjusted upward by +0.1 mb/d and +2.9 mb/d compared to the previous month's forecasts. OPEC+ production in June 2026 showed a month-on-month recovery, with the deviation from target production levels narrowing. Changes in OPEC production primarily stemmed from the United Arab Emirates, Kuwait, and Iraq, with increases of +1,642, +879, and +445 thousand barrels per day (kb/d) month-on-month, respectively. In the United States, rig counts and crude oil production increased in June 2026.
Demand Side: Divergence Among Major Agencies; IEA and EIA Forecast 2026 Demand Decline, OPEC Maintains Growth Forecast
According to projections from the IEA, EIA, and OPEC, global total crude oil demand for 2026 is estimated at 103.5, 102.8, and 106.0 mb/d, respectively. This represents year-on-year changes of -1.0 mb/d, -1.2 mb/d, and +0.8 mb/d. Compared to last month's forecasts, these figures have been adjusted by +0.2 mb/d, -0.1 mb/d, and -0.2 mb/d, respectively. Based on IEA data, global demand for LPG and ethane, naphtha, gasoline, kerosene, diesel, and fuel oil was adjusted by +44, +31, -13, +39, -44, and -4 kb/d month-on-month, respectively.
Inventory Side: Drawdowns to Continue in Q3, Build-Up in Q4; Drawdown Pace Slows for Q3 and Full Year
Global total crude oil inventories are within the neutral range for the same period over the past six years. In June, inventories built by 4.5 million barrels, with floating storage decreasing by 39.5 million barrels and global onshore inventories drawing down by 83.9 million barrels at a relatively fast pace, bringing onshore stocks down to the lower end of the range for the same period in recent years. A drawdown is forecast for 2026, with the IEA and EIA predicting a smaller drawdown magnitude. Both agencies anticipate a generally tight global crude oil supply for 2026, with an annual supply-demand balance of -0.9 mb/d and -0.9 mb/d, representing deficits of -0.02 mb/d and -2.97 mb/d, respectively. The projected supply-demand balances for Q2-Q4 2026 are -2.9 mb/d, -0.9 mb/d, +0.8 mb/d (IEA) and -5.1 mb/d, +2.2 mb/d, +2.7 mb/d (EIA). Both IEA and EIA forecasts indicate a narrowing of the deficit for Q2-Q3.
Key Risk Factors
Significant volatility in crude oil prices; changes in OPEC+ production policy; excessively rapid production growth from non-OPEC+ oil producers; a slowdown in global economic growth leading to reduced crude oil demand; and changes in geopolitical situations.
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