Will the shock come from supply or demand?

On Thursday, crude oil prices increased, by 1.6% to reach $ 103.79/b for the front month WTI and by 1.4% to close at $108.33/b for the Brent.

Traders are still mixed between risks of supply shocks from one side with Libya unable to produce 500 kb a day, the potential ban on Russian oil import in the EU (with concerns expressed by Washington on the global impact if not carefully calibrated, see macro comment) and the short spare capacity in OPEC+, where only Saudi Arabia and the UAE could be able to significantly increase output (see table below).

Market players also see demand concerns on the other side, with multiple Chinese cities under lockdown as well as the hawkish path the Fed wants to embrace to tame inflation that will weigh on growth (see macro comment).

This morning, oil prices are moving down, by 1.2% for both benchmarks.

Table: Spare crude production capacity from some OPEC+ members (Source: Reuters)