JPM Oil Markets Weekly M

J P M O R G A N Global Markets Strategy 06 August 2026

Oil Markets Weekly Miraculous recovery

• An overlooked surge in production outside the Persian Gulf helped cap Global Commodities Research prices, despite the record supply shock. Natasha Kaneva ( • This will be our last Oil Weekly publication until September. Thank you for reading and for your continued engagement. We wish you a wonderful end to the summer and look forward to reconnecting with you in Lyuba Savinova ( September, refreshed and well-rested. Artem Fakhretdinov ( Several factors explain why the largest supply shock on record produced only JPMorgan Chase Bank NA average price outcomes.

Inventory draws, which normally provide the most powerful source of upward pressure, were much smaller than anticipated. At the same time, the loss of demand proved far greater than expected, creating an equally strong offset. Whether this reflects a world that has become far more energy efficient than previously believed, or merely a temporary adjustment, remains an open question until more complete data become available.

China also surprised the market by cutting crude imports and adjusting refinery operations to an extent few thought possible. Tentative signs suggest that other parts of the world may be moving in the same direction, implying that demand could be more flexible than conventional models assume.

There was, however, a third and equally important factor that capped prices. Supply responded faster and at a larger scale than expected. Triple-digit oil prices triggered a surge in production that far exceeded the levels embedded in our models, which were calibrated around our long-held view that Brent would average around $60 in 2026. The incentive to maximize output proved overwhelming, accelerating production growth across multiple regions and adding barrels back to the market.

Figure 1: How markets offset lost Hormuz barrels *Supply loss adjusted for re-routing via Yanbu and Fujairah mbd March April May June July Mar-July Supply Loss Demand Loss Prior Surplus Supply upside vs forecast Inventory draws

million bbls March April May June July Mar-July Supply Loss ,928 Demand Loss Prior Surplus Supply upside vs forecast Inventory draws

Source: J.P. Morgan Commodities Research

See page 27 for analyst certification and important disclosures.

Natasha Kaneva AC Global Markets Strategy ( August 2026 JPMORGAN

In total, from March through July the market lost an estimated 1.9 billion barrels of Middle East crude supply—equivalent to an average disruption of 12.6 mbd over the period. Most of the rebalancing occurred through weaker demand, with consumption running roughly 0.8 billion barrels below baseline (Figure 1).

A further 0.6 billion barrels was bridged through inventory draws, of which 0.5 billion barrels can be directly tracked in observable stock data. Another 0.4 billion barrels were effectively absorbed by pre-existing surplus—barrels that, absent the disruption, would likely have gone into inventory builds but ultimately were not needed.

The remaining gap of approximately 0.1 billion barrels was offset by stronger-than-expected supply outside the Middle East, led primarily by the US, Brazil, Canada, and Venezuela (Figures 2 & 3).

Despite our price outlook, we were constructive in late 2025 on non-OPEC supply growth over the subsequent two years. Our view reflected the composition of expected growth: primarily price-inelastic deepwater producers like Brazil and Guyana, alongside moderately low-cost producers like Canada and Argentina. In the US, we estimate the national average WTI price at which cash flow is roughly breakeven at around $48/bbl, meaning our price forecast sat comfortably above that threshold.

Even so, the outcomes in the first half of 2026 outpaced our already bullish expectations. Total non-OPEC supply growth reached 2.44 mbd year-on-year—the strongest pace recorded so far this decade (Figure 4). The largest contributions came from the US (0.9 mbd), Brazil (0.8 mbd), Guyana (0.3 mbd), Canada (0.2 mbd), and Norway (0.15 mbd). More broadly, production growth across countries outside the Persian Gulf exceeded our expectations by roughly 0.7 mbd in 1H26. While this…