Red lights are flashing on the scarcity of oil | CNN Business

Six weeks ago, the world was practically swimming in crude oil. The market was oversupplied and prices were low and stable. But now, some parts of the energy market are acting like the world is on the verge of running dry. That’s because the war in the Middle East has sparked the biggest oil supply disruption on record, sidelining an estimated 12 million to 15 million barrels of crude oil per day. A supply shock of that magnitude is simply not sustainable. Neither emergency oil releases nor promised production hikes from OPEC+ can fill the gap. Now, red lights are flashing in the market about the physical supply of barrels needed to meet demand and power the world economy. “The longer this goes on, the scarier it is. Today we might not have a shortfall, but eventually we will,” said Andy Lipow, president of Lipow Oil Associates. “If we continue on the path we are on now, we will run out of fuel,” he warned. The futures and physical oil market are signaling major warning signs. Contracts for delivery at the end of this month are trading at a hefty premium compared to contracts for subsequent months. It’s a situation known as backwardation, and it suggests the market beli