Oil market at 'tank bottoms' in Asia, and Europe isn't far behind, warns market veteran Jeff Currie
Cracking towers stand beside access roads at the Ruwais refinery and petrochemical complex, operated by Abu Dhabi Oil Co. (ADNOC), in Al Ruwais, United Arab
Cracking towers stand beside access roads at the Ruwais refinery and petrochemical complex, operated by Abu Dhabi Oil Co. (ADNOC), in Al Ruwais, United Arab Emirates. Bloomberg | Bloomberg | Getty Images Oil markets are nearing minimum operating levels in Asia, with Europe likely next and the U.S. potentially facing shortages by July, said veteran market strategist Jeff Currie on Monday, underscoring the global energy shock due to the Iran war. Headline global inventory figures can be misleading as much of the oil stored worldwide cannot be used immediately, said Currie, Carlyle's chief strategy officer of energy pathways and co-chairman of Abaxx Markets.
A large portion of that oil is needed to keep pipelines and storage systems running safely, leaving only a smaller share available for the market. Asia is already close to these so-called "minimum operating levels," Currie told CNBC on the sidelines of the UBS Wealth Conference in Singapore. Global oil markets have been under strain since the outbreak of the Iran war earlier this year, after disruptions to shipping through the Strait of Hormuz sharply curtailed energy exports from the Middle East. The next one would be Europe. We expect Europe to start to have problems sometime... after this bank holiday.
Jeff Currie Carlyle, chief strategy officer of energy pathways "We've seen explosive prices on products. Jet fuel has come down, but diesel has now gone up above jet fuel. So, the problem here in Singapore continues. It just moved from jet to diesel," said Currie. Europe could begin seeing similar strains within weeks, as the current relief from U.S. oil flows may prove temporary, and as the summer driving season starts. "I would say, Asia, you're there. Europe, give it about another month, and look for July being a problem in the U.S.," Currie said. "All of the inventories that are drawing out of the United States out of the U.S. SPR [Strategic Petroleum Reserve] are being exported into Europe, so the Europeans think they have no problem because they're getting all of this oil being imported from the United States, but that can't continue on." His comments come on the back of recent warnings by the International Energy Agency that the global oil market could face a critical supply squeeze during the peak summer consumption period, especially if Middle Eastern exports fail to recover and inventories continue falling.
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