Russell Hardy, chief executive of the oil trader Vitol, now says oil demand will have shrunk by about 3 million barrels a day by the end of 2026, and that it will then take a year to climb back to its 2025 level. He adds that the world has no spare production capacity and cannot cope with a disruption larger than today's.

That is a change of emphasis from early October, when Hardy's worry was supply. He said then that 14 million barrels a day of exports from the Middle East were needed to keep prices under control, and that prices could reach $200 a barrel without them. Western inventories are limited, he said, and the binding problem was shipping: ship-to-ship transfers in the Gulf of Oman are highly inefficient, and much of the regional oil moves without AIS ship tracking.

Hardy's two warnings fit together. A shortfall of about 3 million barrels a day is not a one-quarter dip but a loss that, on his timetable, takes a full year to repair, while logistics limit how much supply can reach buyers. A market in that position has little room for error. With no spare capacity to draw on, crude is exposed to whichever side gives way first.

The cushion that would normally absorb a shock is thin. The US Energy Department is lending oil from the Strategic Petroleum Reserve to five companies, including Trafigura, Gunvor and Vitol itself, with the reserve at its lowest level since 1982. It has sought an exchange of up to 17 million barrels, after offering up to 40 million in September and running a 4-million-barrel emergency exchange in October. There is an awkwardness in the arrangement: Vitol is warning of a shortage while borrowing from the public stockpile meant to cover one.

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