In Episode 207 of the Facts vs Feelings podcast, Carson Group’s Ryan Detrick, Chief Market Strategist, and Sonu Varghese, Chief Macro Strategist, welcome back Rory Johnston, founder and CEO of Commodity Context, to make sense of an oil market that remains historically tight more than 200 days into the war with Iran. Rory explains why Brent sits near $108 with extreme backwardation, why roughly 13.5 million barrels a day are now moving through the Strait of Hormuz versus a pre-war normal of about 21 million, and why he calls himself a “Hormuz half-empty” kind of guy.
From there, the conversation turns to what Rory calls the “Beijing swing,” as China cut net crude imports by about 5.5 million barrels a day, and to record-high diesel prices, including what a U.S. diesel export ban would mean for prices at the pump. The episode wraps with the market signals Rory watches that may indicate when the crisis is truly over: rising OECD inventories and the front of the crude curve flipping into contango.
Key Takeaways
- Brent is near $108 with prompt spreads close to $8 a barrel, signaling an acute physical deficit even though Hormuz flows have recovered to about 13.5 million barrels a day, up from near zero for non-Iranian crude in March and April.
- Rory argues Iran is gradually losing control of the strait, but the cost is enormous: Iraqi barrels have been discounted by $30 to $50, VLCC rates have hit record highs, and the war is far from over.
- China cut net crude imports by roughly 5.5 million barrels a day, and Rory believes drawdowns of strategic crude and diesel stockpiles, not just weak demand, explain much of that swing, making it inherently unsustainable.
- Diesel remains the tightest part of the market, with roughly 2 million barrels a day lost from the Middle East and Russia, U.S. exports up about 50%, and diesel cracks running at several times normal levels.
- A U.S. diesel export ban would lower domestic prices but send global diesel prices soaring and eventually force refinery run cuts. Rory expects a rationing of export licenses rather than a full ban.
- In Rory’s opinion, the clearest signal the crisis is over would be OECD inventories rising and the front of major crude curves flipping into contango, which would show the supply deficit is truly behind us.
Jump to:
0:00 — Welcome and a Family Update
2:35 — Rory Johnston Returns and Reintroduces Himself
6:40 — From $200 Oil Fear to Reality
10:45 — What Tight Backwardation Is Signaling
14:55 — Hormuz Transit Data and Dark Tankers
25:10 — China Demand Swing and the Brent WTI Gap
38:15 — Why the War Keeps Dragging On
42:10 — Diesel Shortage and Export Ban Math
47:55 — The Cleanest Signal the Crisis Ends
50:15 — Where to Follow Rory and Final Thanks
Connect with Ryan:
- LinkedIn: Ryan Detrick
- X: @ryandetrick
Connect with Sonu:
- LinkedIn: Sonu Varghese
- X: @sonusvarghese
Questions about the show? We’d love to hear from you! factsvsfeelings@carsongroup.com
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Rory Johnson is not affiliated with CWM, LLC. Opinions expressed by this individual may not be representative of CWM, LLC.
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