Despite the difficult geopolitical backdrop and other supply problems, headline oil prices are little changed from a month ago at just above $70/bbl for Brent.

In the intervening period, the decision by the US to cease the waiver programme for buyers of Iran’s crude oil did see Brent briefly reach $75/bbl.

However, there have been clear and, in the IEA’s view, very welcome signals from other producers that they will step in to replace Iran’s barrels, albeit gradually in response to requests from customers.

In this Report, there is a modest offset to supply worries from the demand side. IEA's headline growth estimate for 2019 has changed little since the middle of last year, but this month IEA cut it by 90 kb/d to a still healthy 1.3 mb/d.

The reduction is mainly concentrated in Q1 2019 on weaker than expected data for Brazil, China, Japan, Korea, Nigeria, and elsewhere lowering growth by 410 kb/d.

Even so, slower demand growth is likely to be short-lived, as we believe that the pace will pick up during the rest of the year.

An important implication is that in Q1 2019 the oil market saw an implied surplus of supply over demand of 0.7 mb/d, which was higher than previously suggested.

As we move through 2Q19, while there is considerable uncertainty on the supply side, it is highly likely that the implied balance will flip into an indicative deficit of about the same size.

Stocks in the OECD at the start of April have fallen back to the level seen in July in terms of days of forward cover and other stock indicators are pointing in the same direction.

For now, despite all the supply uncertainty, headline Brent oil prices are little changed from a month ago.

However, the backwardation has steepened considerably and front month prices are about $3/bbl higher than for six months out.

The decline of 230 kb/d in the North Sea loading programme for June versus May, although not a surprise, is another important factor adding to overall concerns about supply.

Elsewhere, contract prices are rising sharply with Asian customers paying significantly more for barrels from Middle East sources as they seek to replace their normal supplies of Iranian crude. Basrah Light, for example, was reported as offered at its highest level for nearly eight years.