The global energy market is facing “severe pressure” as refining capacity bottlenecks and supply chain disruptions converge.
While crude benchmarks like Brent are hovering around $102 per barrel – underlying pressures in refined products signal deeper systemic issues.
According to Matt Stanley, Senior Director at market intelligence firm Kpler, the current strain on middle distillates – specifically diesel, gasoil, and jet fuel – indicates that energy prices could stay elevated well into next year.
With refining runs dropping and key global maritime trade routes constrained, Stanley warns that crude oil hitting $150 per barrel remains quite a realistic scenario.
Why Stanley warns of a further increase in oil prices
Stanley expects a continued surge in oil prices to $150 into next year primarily because of extreme tightness of the global refining system.
He points out that while investors typically monitor Brent or WTI crude benchmarks, the real stress is occurring in end-user fuels like diesel – which drives heavy industry, freight logistics, and static power generation.
European refining runs risk falling significantly, exacerbating an already short market for middle distillates.
This structural deficit is compounded by mounting geopolitical choke points.
Essential maritime trade pathways – such as the Red Sea and the Strait of Hormuz – face ongoing disruptions, hindering shipments of critical energy feedstocks to European and global destinations.
“This is no longer a cyclical issue. If you look at the forward curve, even where next year is trading, it’s still way over $150 a barrel,” Stanley noted in a CNBC interview on Thursday.
When key export hubs face operational constraints or route blockages, alternative origins like the US refining complex become stretched to capacity, leaving no immediate relief for global distillate inventories.
What else could drive oil prices higher
The second major pillar supporting Matt Stanley’s concerning $150 oil price thesis centers on crude feedstock availability and potential supply chain re-alignments.
Proposed legislation and expanded secondary sanctions targeting buyers of Russian energy could restrict flows of Urals crude to major Asian buyers like China and India.
Replacing millions of barrels of specific crude grades is not a simple operational fix for refineries designed for specific heavy or medium sulfur feeds.
While Asian refiners have shown flexibility, substitution options remain constrained.
If Indian and Chinese refiners face restricted crude imports, they’ll inevitably pivot to prioritize domestic energy security over international product markets.
“They will prioritize domestic consumption, domestic energy security, and that means that exports from refineries…there’re less exports available and then the whole global system tightens,” Stanley explained.
This drop in export volumes from major Asian refining hubs threatens to shrink global supply further, locking in a prolonged “higher for longer” pricing environment across the entire oil curve. Kpler’s senior director concluded in a CNBC interview today.
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