According to ING strategists Michiel Tukker and Benjamin Schroeder, oil prices have returned to pre-war levels, but the market may be overly optimistic regarding the speed and durability of the supply recovery [1]. The strategists point to an unstable balance between demand, physical buying, and the release of strategic reserves, which has contributed to the recent decline in oil prices [1]. They note that physical buyers are currently waiting for more favorable pricing, while countries continue to add supply to the market from their strategic reserves [1].
However, ING warns that this situation does not represent a stable equilibrium. Eventually, buyers will need to re-enter the market, and strategic reserves will require replenishment, which could support prices [1]. The analysts see upside risks in the near term that may exert upward pressure on oil rates [1].
Looking ahead, ING suggests that the full impact of second-round inflation effects and the future trajectory of oil prices will only become clearer later in the year [1].
CONCLUSION
ING strategists caution that while oil prices have stabilized at pre-war levels, the current supply-demand dynamics are fragile and could lead to upward price pressures. Market participants should remain alert to potential volatility as the true path of supply recovery and inflation impacts will only be clarified later this year.