Oil Ground Up Brutal Barrel Math: The Destruction of 10+ Million Barrels a Day Demand
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Apr 2, 2026 Kareem Fawaz, Director of Energy and Natural Resources at S&P Global, breaks down a four-week Strait of Hormuz shutdown and a 12–13 million bpd physical loss. He explains why futures underprice the shock. Short, urgent talks cover chaotic demand rationing, refining bottlenecks, the “Unilateral Taco” risk of U.S. withdrawal, and how North America might insulate itself.
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Futures Underprice A Historic Physical Shock
- Futures markets are grievously underpricing the physical loss of 12–13 million barrels per day from the Strait of Hormuz closure.
- Kareem Fawaz says paper barrels lag physical reality because traders relied on 'irrational optimism' that the disruption couldn't persist for weeks.
Forced Supply Loss Is More Disruptive Than Pandemic Demand Shock
- This crisis is qualitatively different from the pandemic because supply is being forcibly removed rather than demand being managed.
- Kareem Fawaz stresses an unmanaged supply shock forces chaotic rebalancing and is far more disruptive than COVID-era demand loss.
Industry Optimism At CERAWeek Missed Diplomatic Complexity
- Industry conversations at CERAWeek skewed toward short-term optimism despite the conflict's complexity and diplomatic constraints to reopening Hormuz.
- Fawaz notes panels from defense experts were far more pessimistic than much of the industry, showing a disconnect in risk framing.