Eoin Treacy's view

Here is a link to the full report and here is a section from it:

Though trade war concerns are roiling the oil market at the moment, we continue to contend that events in the Middle East warrant very close watching over the course of the summer. The King of Saudi Arabia will convene an emergency Arab summit in Mecca on Thursday in an attempt to forge a united front to deal with the Iran threat in the wake of the attacks on the four tankers in UAE’s territorial waters and the sabotage of the East-West pipeline in Saudi Arabia earlier this month. The Emir of Qatar is reportedly attending, marking the first time that he will set foot on Saudi soil since the 2017 blockade severed all commercial and transportation links between the Gulf neighbors. While many market participants see the recent security incidents as business as usual for the region, we see an abundance of escalation risks in large part because the US sanctions are subjecting Iran to almost unprecedented economic pain. President Trump continues to insist publicly that he is not seeking regime change, rather merely a better nuclear deal. However, from Tehran’s vantage point there is probably an extremely thin line between measures designed to cause an economic collapse and explicit calls for new leadership. If Washington holds the line on the sanctions and sticks with its 12 hardline conditions for economic relief, it is difficult to envision a diplomatic breakthrough emerging in the near term, particularly given the Iranian Supreme Leader’s marked preference for showing strength and avoiding concessions during a crisis. We also see certain upcoming events, including the July 7 deadline for Europe to find a sanctions workaround, as representing important inflection points. Similarly, certain events, such as surge in Houthi attacks on Saudi infrastructure, could bring the region closer to a full-blown conflict. This piece serves as something of a guide to the key personalities, events, and strategic sites that could determine the course of events over the coming months.

The biggest issue for oil prices right now is the risk of slowing Chinese demand growth and what that means for global demand growth. Auto sales in China are declining. Regardless of whether that is because of regulatory restrictions on purchases or because of slowing growth the reality is we are seeing fewer cars being sold. With thousands of jobs being lost at auto makers that is both a factor for oil demand growth but doubly so because of the impact on GDP growth.

That represents a challenge for oil prices and a significant deterioration in the ability of the sector to maintain supply will be required to support prices. Brent crude has pulled back to break the six-month uptrend, suggesting a much more volatile period of trading is unfolding.