Page 5 - Policy Economic Report - April 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

prior to the crisis. Exports through alternative routes including the west coast of Saudi Arabia, Fujairah on
the UAE’s east coast, and the ITP pipeline connecting Iraq to Ceyhan in Türkiye had increased to 7.2 mb/d,
up from less than 4 mb/d before the conflict. Overall, the disruption has resulted in a loss of more than
13 mb/d in oil exports. Combined with associated production curtailments and damage to regional energy
infrastructure, this has led to cumulative supply losses exceeding 360 mb in March, with losses projected
to surpass 440 mb in April.

Consumers and refiners alike are tapping into oil inventories to mitigate the immediate impact of supply
disruptions. In March, global observed oil stocks fell by 85 mb despite an accumulation of both on-land
and offshore inventories in the Middle East and further builds in China. The largest decline came from oil
on water following the near halt to sailings from Gulf producers dependent on the Strait. Crude oil stocks
in importing countries in Asia dropped by 31 mb, with further declines expected in April. Where oil
inventories could not bridge the gap, demand has taken a hit. Most notably, Asian petrochemical
producers have curtailed operating rates as feedstock supply dried up. Households and businesses using
LPG have also been impacted, while flight cancellations across the Middle East, parts of Asia and Europe
have led to a sharp drop in jet fuel consumption. A growing number of countries have implemented
policies to reduce demand, while others have put in place measures to shield consumers from the full
impact of rising fuel prices. Overall, global oil demand is estimated to contract by 800 kb/d year-on-year
in March and by 2.3 mb/d in April.

Hedge funds and other money managers turned increasingly bullish on oil in March, sharply increasing
their net long positions amid large supply disruptions and rising oil prices, given the escalating geopolitical
tensions. ICE Brent net long positions rose to their highest level since October 2018, accompanied by
substantial financial flows into futures contracts for both ICE Brent and NYMEX WTI. Net long positions in
the two contracts increased by about 38% in March, with speculators buying an equivalent of 152 mb.
The sharp rise in oil futures prices prompted speculators to close more short positions as they managed
their previous bearish bets, while others accumulated additional long positions.

Crude spot prices rose sharply in March, supported by disruptions to crude and petroleum product flows
and deteriorated regional shipping operations in Middle East. These developments tightened physical
markets and led to an increase in the demand for prompt crude replacement from other regions, such as
the Atlantic Basin, North Sea, Caspian, Mediterranean, and Asia-Pacific. A sharp rise in middle distillate
crack spreads across all main refining hubs added support to spot prices. The tightness in the physical
market was also reflected in the dislocation between spot and futures markets, which was seen in the
spread between North Sea Dated and ICE Brent.

Natural Gas spot prices at the US Henry Hub benchmark averaged $3.04 per million British thermal units
(MMBtu) in March 2026. Henry Hub natural gas prices dropped for a second consecutive month in March,
falling 15.7%, m-o-m. Prices continued to decline amid a shift from end-of winter demand to the
restocking season. According to data from the US Energy Information Administration (EIA), the withdrawal
rate dropped by 96.4%, m-o-m. Losses were limited by higher US LNG demand in March amid supply
disruptions in the Middle East. Prices were down by 26.2%, y-o-y.

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