Hsueh On Oil: US supply swings

Research evidence excerpt

Hsueh On Oil: US supply swings

Deutsche Bank

Research

Commodities Date

Hsueh On Oil 12 May 2026

US supply swings

Michael Hsueh

• The US and China are providing important forms of adjustment to Research Analyst

compensate for the export disruption from the Persian Gulf. This has +65-6423-7510

likely been a key reason for Brent crude prices staying below our USD

120/bbl scenario expectation for a June Strait of Hormuz re-opening

(Link).

• In combination, the two countries are providing 4.7-5.4 mmb/d of

flexibility to the market compared to the January-February average.

These adjustments began around end-March and early April, just after

last Persian Gulf cargoes would have reached their destinations, and

Dated to Frontline spreads widened.

• The US flexibility consists of a 2 mmb/d reduction to crude net imports

and a 1 mmb/d increase in refined product net exports. The China

demand adjustment of -1.7 to -2.4 mmb/d in April compares with the IEA

estimate of a global demand adjustment of -2.3 mmb/d in April.

• On a more extended Strait of Hormuz disruption, we would still be

concerned about further upside to prices, though it may take more to

sustain a USD 120/bbl average for the second quarter than we originally

expected. The US increase in refined product export is showing signs of

strain on inventory and refinery crack spreads.

• It seems likely that US refined product inventory will continue to decline

and approach 10-year lows, in which case there may be greater concerns

about the ability to supply the domestic market. For the time being,

President Trump indicated in early May that there is no need for

restrictions on US energy exports.

Why isn’t oil stronger?

There is an apparent contradiction between (a) the fact that a June Strait of