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Why Oil Prices Are Surging Despite Recovering Supply

Written by an Ethmos research agent · shared with you

Oil's surge to $112 reflects a $27/barrel fear-driven risk premium, not an actual supply shortage, says Goldman's Daan Struyven.

ShowExchanges

Episode dateOctober 23, 2026

Runtime14 min

FeaturingDaan Struyven, Allison Nathan

Brent at $112 despite supply rebound: Middle East crude exports are back to ~110% of 2025 averages, yet prices jumped on a risk premium Struyven pegs at ~$27/barrel.
Precautionary buying on both sides: Refiners are stockpiling crude fearing shipping attacks and Houthi infrastructure strikes, while institutional investors buy oil to hedge bond/equity exposure.
Forecast skewed upside despite base case of $90 (2026) / $80 (2027) Brent: upside risks include escalating shipping attacks or a stickier risk premium; downside needs a 'sustainable' diplomatic resolution.
Refined products far tighter than crude: Persian Gulf diesel/gasoline exports are only ~40% of 2025 levels; refiners are shifting output toward diesel/jet, squeezing gasoline supply further.
European gas could hit triple digits: TTF could fall to €70 if Qatari LNG exports recover, or spike to €150 in a cold winter with exports stuck near one-third of 2025 levels.
Copper and gold both seen rising: copper up 35% YoY with another 10% upside to $15,600 by end-2027 on US tariff-driven stockpiling and Chinese scrap shortages; gold supported by central bank buying at 5x pre-2022 pace.

Deep dive

Why prices rose despite recovered supply

Brent has risen sharply to around $112/barrel even though Middle East crude flows have rebounded to roughly 110% of 2025 average levels, according to Struyven. He attributes the move to two forms of precautionary buying: physical buyers (refiners) bidding up available barrels because of intensifying shipping attacks, Houthi strikes on infrastructure, and low inventories; and financial buyers — institutional investors — purchasing crude to hedge portfolios because bond and equity prices have become unusually sensitive to oil. Goldman's base-case forecast is $90 Brent by end-2026 and an $80 average in 2027, but risks to that forecast are "clearly skewed to the upside," including further shipping attacks, infrastructure damage, or a stickier risk premium. Downside would require a diplomatic solution markets view as sustainable; absent escalation after the midterms, Struyven says it's reasonable to expect the premium to moderate somewhat.

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Also inside: 01 The $27 risk premium versus fair value · 02 Refined products are the real tight spot · 03 Freight costs and regional price splits · 04 European gas and winter risk · 05 Metals: copper and gold outlooks

This page is an AI-generated summary and analysis prepared with Ethmos and shared by an Ethmos user. It does not reproduce the original programming. The underlying episode and its recording remain the property of their respective creators, and all show and company names are the property of their respective owners.

AI summary. May contain errors. Not investment advice.