Although oil markets are tight, there is the potential for price crash later this year.
On the supply side, the potential for bearish move is limited, especially for a sudden move. A restoration of the JCPOA with Iran would be such a move as it would quickly add about 1 mb/d to the market. The chances of a surge in production from the three OPEC+ countries with the most spare capacity—Iraq, Saudi Arabia and the U.A.E.—seems unlikely given their adherence to quotas over the past several years.
But, as oil trader Hamlet would say, there’s the rub. The gorilla in the room is the Fed, which seems inclined to throw poo at us . Recently, stock markets took a hit from expectations of higher interest rates, selling on the rumor but then buying on the downdip.
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