Oil market bearish for crude, bullish for products, says TotalEnergies CEO

TotalEnergies SE CEO Patrick Pouyanne revealed on Wednesday at the ONS conference in Stavanger, Norway, that the global oil market exhibits contrasting trends for crude oil and refined products. Crude oil shipments still pass through the Strait of Hormuz without hindrances, yet higher shipping expenses have halted all refined product flows via the waterway, Pouyanne explained.

Ukrainian drone attacks have cut Russian fuel supplies by 3 million to 3.5 million barrels per day. Pouyanne noted that the oil market is bearish for crude oil but very bullish for products, which is an unusual situation. European consumers and those in the US will face the consequences, with gasoline prices unlikely to fall below $4, as President Trump desires.

The benchmark crude oil price hovers around $90 per barrel in London, lower than levels at the onset of the war. The premium for products like diesel against crude oil has reached its highest point in over 15 years. Shipping a massive crude carrier with a 2 million barrel capacity through Hormuz costs approximately $20 million, Pouyanne added.

Smaller vessels transporting refined products find the added expense too burdensome, leading to no product tankers passing through Hormuz.