Data implies oil markets are in balance as of May 12 (or earlier) and inventories are beginning to rise, according to multiple sources

I wrote this in “my vibe” and sent it out to subscribers last night: jj745.substack.com/p/ev…

my vibe

After 74 days of blockade, GCC crude supply to global markets (excluding Iran) stands at approximately 9.0–9.5 million barrels per day, primarily through Saudi Arabia’s 7.0 mbpd East-West Yanbu pipeline, the UAE’s 1.8 mbpd pipeline to Fujairah and Iraq/Kuwait dribbles at 0.5 to 0.8 mbpd. Non-GCC incremental production growth is estimated at 1 to 1.5 mm bpd.

The ongoing IEA emergency stock release is 3.3 mbpd, global demand destruction is 8.5 to 9 mbpd, including JPM’s 5.5 mmbpd posted on May 2 and China’s 3.5 mbpd reduction in crude imports announced last week.

Using mid-to-low assumptions drawn directly from data noted above… total net offsets (supply+demand destruction) equal 24.1 mbpd vs the pre-war Strait of Hormuz baseline of 20 mbpd.

I will say it again: Stable GCC flows, higher new incremental bpd and demand destruction (!) are actually pushing global inventories higher for an impressive net surplus of 3.5 to 4 mbpd above pre-war SOH flows… according to sources noted below.

Primary sources as of May 12, 2026):

• International Energy Agency (IEA) — Oil Market Reports (April 2026), emergency stock release announcements (March 2026, 400 million barrels/ 3.3 mm bpd), and Strait of Hormuz data. iea.org

• U.S. Energy Information Administration (EIA) — Short-Term Energy Outlook (May 2026), global inventory draws, and production shut-in estimates. eia.gov

• Reuters — Coverage of Saudi/UAE bypass flows, China crude import data (April 2026 drop to ~8.0 mbpd), and Gulf pipeline updates. reuters.com

• J.P. Morgan — Demand destruction estimates (5.5 mbpd baseline in early May reports) and oil market math analysis. youtube.com

• Kpler and Bloomberg/Reuters field data — Real-time tanker tracking, bypass utilization (Saudi East-West 7 mbpd, UAE ADCOP 1.5–1.8 mbpd), and inventory tracking.

Higher prices are already engaging non-OPEC projects that were on the margin at $60/barrel in February. Accelerating demand destruction (2.8 mmbpd in March, 4.1 mm bpd in April, and 5.5 mm bpd in May) is trending higher. The deficit is nowhere near as tight as the consensus claims. These data tell us the physical oil markets are already balanced or even slightly long.

So why is crude still going up? The power of epidemic misinformation coming from Aramco’s CEO, stale statistics and a choir of money center banks (JPM & GS last week/ MS this morning) pandering to the GCC for deal flow. Plus I don’t think anyone has bothered to check these numbers yet…. 3 or 4 mm bpd is a ripple in the ocean but … its up not down.

The massive COT spec position is getting bigger. The Bond shorts are getting shorter. Stocks are relatively bullet proof because breadth is down to 20% so there’s an algorithmic moat around the AI gambit. Gold is quietly observing.

As always yours faithfully,

JJ Alyosha