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

The global oil market presents contrasting trends for crude oil and refined products, according to TotalEnergies SE CEO Patrick Pouyanne. Despite uninterrupted crude shipments through the Strait of Hormuz, the high shipping costs have halted refined product flows via the waterway, Pouyanne explained at the ONS conference in Stavanger, Norway.

Ukrainian drone strikes have slashed fuel supplies from Russia by 3 million to 3.5 million barrels per day, creating a "bearish crude oil market and a very bullish product market," according to Pouyanne. He noted that consumers in Europe and the United States will face higher prices, with gasoline prices potentially not dropping below $4 despite President Trump's preference.

The benchmark crude oil price sits near $90 per barrel in London, lower than levels observed at the war's onset. The price premium for products like diesel over crude has reached its highest in over 15 years. Shipping a large crude carrier with a 2 million barrel capacity through Hormuz costs approximately $20 million, while smaller vessels transporting refined products find the additional expense too prohibitive, resulting in no product tankers moving through the Strait, Pouyanne said.