NAB Morning Call Weekend Edition: An oil glut amidst geopolitical uncertainty
Jan 30, 2026
Rory Johnston, oil market researcher and founder of Commodity Context and lecturer at the University of Toronto’s Munk School, breaks down why a growing oil glut has driven prices lower. He explores how geopolitical risks like sanctions and Venezuela mask the surplus, how OPEC moves and U.S. shale incentives shape supply, and what price thresholds and inventory corrections might mean for future markets.
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Historic Oil Glut Pressures Prices
- The market faces one of the largest oil gluts since 2020, driven by supply outpacing demand.
- Futures term structure and rising inventories signal persistent downside pressure on prices.
Transit Risk Inflates Oil Prices
- Geopolitical risk (e.g., Iran/Hormuz) matters because markets hedge precautionarily, not just for realized supply losses.
- Small increases in disruption odds can add several dollars to oil prices due to transit concentration through Hormuz.
Kazakhstan Production Losses Supported Market
- Kazakhstan's Tengiz fire and CPC terminal bombings produced a realized loss of supply yet had limited price reaction.
- Those disruptions nonetheless helped support the market over the past month.