The equilibrium at $105 reflects a market caught between recovering production and expanding regional instability. While US Gulf of Mexico operations return to normal, the focus has shifted to the physical vulnerability of energy assets. Houthi drone strikes have reached Saudi Aramco’s Dhahran headquarters, signaling a tactical escalation that threatens regional export flows. Simultaneously, the Russia-Ukraine energy standoff has resumed, with Ukraine striking Rosneft’s 340,000 b/d Ryazan refinery following the collapse of a brief, unofficial energy truce.

Global supply pressures are further compounded by structural deficits. The International Energy Agency projects that diesel tightness will persist through 2027, as production dropped to 27.2 million b/d year-on-year. In China, refiners are navigating volatile export policies, while solar manufacturers have shed over 40,000 jobs to combat massive industrial overcapacity. Meanwhile, the Trump administration is navigating its own energy agenda, from leveraging the Defense Production Act to expand domestic refinery capacity at plants like Delek’s Tyler facility, to navigating the complexities of the Alaska LNG project and shadow fleet sanctions.