Crude Premiums Decline as Refiners Tap Oil Reserves
Spot crude premiums are easing as refiners cut output and tap reserves to manage supply losses. Demand destruction may reach four million barrels per day in Q2.
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Physical crude premiums are falling from record highs as refiners in China and elsewhere cut processing and tap inventories. Premiums for some grades hit $30 a barrel earlier in April following the U.S.-Israeli war on Iran that began on February 28, which caused the near-total closure of the Strait of Hormuz. Investors should note that Morgan Stanley estimates demand destruction of 4.3 million bpd is offsetting the 15-million-barrel-per-day loss in Middle East crude supply.
