Traders Should Brace for July Oil Price Spike as Chinese Maintenance Season Ends

Traders Should Brace for July Oil Price Spike as Chinese Maintenance Season Ends Strategic reserve drawdowns accelerate while 10-13 million barrels per day remain shut in behind Hormuz. Oil traders lap up every word from Trump about a potential Iran deal. But the market needs to brace for a July jump as Chinese refineries emerge from maintenance and compete for barrels in a market already 10-13 million barrels per day short.⁸ The Hormuz closure shut in 14 million barrels per day. Strategic reserve releases and demand destruction have absorbed some shortfall, but buffers are depleting. The diplomatic stand-off means 10-13 million barrels fail to reach the international market daily.^6,3 July WTI settled at $97.91, gaining 7.45% for the week in a range of $92.84-$99.09. Brent fell to $95.54 on peace talk optimism while WTI dropped 6.1% to $92.85 in a single session.^5,1 When Trump announced a ceasefire, crude plunged 16.4% to $94.41 in one day, the largest decline since 2020. Brent fell 13.3% to $94.75. JPMorgan said markets would treat it as a de facto end. They were wrong. Talks stalled and Brent rose $3.13, or 3.0%, to $108.46 on a single Monday.^2,3 The July risk centres on Chinese demand. Morgan Stanley suspects crude once held underground has moved above ground, covering the shortfall. Such drawdowns will accelerate when Chinese maintenance season ends and refineries increase throughput.⁷ The IEA released 400 million barrels across 32 members. "That is only 20% of our resource," Birol said. Goldman raised Q4 forecasts to $90 Brent and $83 WTI, citing reduced Middle East output. Those targets now look conservative.^1,3 The Economist argued oil markets were in "La La land" given the 14 million barrel per day shortfall. US pump prices could cross 50% above pre-crisis levels by Memorial Day.^6,7 Iran’s foreign minister warned his country’s reaction to further strikes would be severe. Experts warned of triple-digit prices becoming the new normal.⁴ The signal to watch is Chinese refinery run rates through June. When maintenance ends, the incremental demand tests whether SPR releases and covert Hormuz transits can hold. If not, July is where the price adjustment arrives.^7,8