Brent crude was grossly overvalued at 124 in June and black gold has come down as supply angst is replaced by the very tangible reality of a China where 7% GDP growth is not going to come back for the rest of the decade. Thus demand destruction in the petroleum products market is inevitable.

At $85, Brent is now below its level when the Russian Federation invaded Ukraine. It is significant that recession risk and a wet barrel glut triggers a tsunami of selling in the crude oil futures/swap markets, even though Putin made a nuclear threat against the West and ordered mobilisation for the first time since WWII.

OPEC+ has been unable to prevent the fall in oil prices since June, despite its symbolic 100,000 barrel output cut. Saudi Arabia does not want to act as the swing producer in OPEC, the central bank of oil, since it knows that quota discipline breaks down in an oil glut and a Darwinian price war then becomes the end game. This is exactly what happened in June 2014, when Chinese demand sagged, and April 2020 when the Covid virus hit the global economy.