Source Overview

Tom Baker, Vitol's Managing Director for Bahrain, speaking at the S&P Global Energy Middle East Petroleum and Gas Conference in London on June 2, 2026. Vitol is the world's largest independent oil and gas trader, with ~$500B+ annual revenue. Baker's comments provide the perspective of the largest physical commodity trader on the Hormuz crisis, with specific emphasis on the gap between paper market pricing and physical market reality, and the severity of Western government underestimation of the situation. Tier 2 source — practitioner perspective from the largest physical oil trader, but based on a conference summary rather than full transcript.

Key Claims & Data Points

~14 mbd Offline / Largest Supply Crisis

  • ~14 mbd offline: Iran's effective closure of the Strait of Hormuz and attacks on energy infrastructure (oilfields and refineries) have taken about 14 million barrels of Middle East supply offline — causing the largest oil supply crisis in history.
  • Crude can come back online faster than refined products: "Crude can come back online, but from a product perspective, it might be very hard for the system to catch up for the rest of the year."

Demand Destruction

  • ~4 mbd demand destruction worldwide: Baker's comments at the conference implied significant demand destruction is occurring or will occur. The ~4 mbd figure is cited in the task brief as the key demand destruction number from this source.
  • "China won't indefinitely not import 5 mbd": Baker specifically highlighted that China cannot indefinitely continue to not import ~5 million barrels per day, and that at some point, physical molecules will be needed and prices will have to rise.
  • Demand destruction is the only solution at that point: "The only solution to higher prices at that point would be demand destruction."
  • Demand destruction unlikely at $90/bbl: Baker added that demand destruction is unlikely to occur with oil prices falling towards $90 a barrel — suggesting the market is in a precarious zone where prices could spike again when China's demand returns.

Western Governments Underestimating Severity

  • "West asleep at the wheel": The task brief describes the headline as "West asleep at the wheel" — capturing Baker's key message that Western governments are underestimating the severity and duration of the supply crisis.
  • The turning point: "The turning point could be when someone really needs those physical molecules and the physical molecules just aren't there to buy."

LNG Market

  • LNG +7% / +40 bcm in 2026: The task brief notes LNG demand rising +7% (+40 bcm) in 2026 as a corollary impact of the oil shock — reflecting fuel-switching from oil products to gas in power generation and industrial sectors.

Price Context

  • Brent peaked at $126/bbl: The Middle East conflict and effective closure of Hormuz sent oil prices as high as $126/bbl.
  • Price had receded to ~$95/bbl by June 2: Prices stood at about $95/bbl on June 2 — a significant pullback from peak but still elevated.
  • Market underpricing risks: Baker's core message was that the market at $95 was underpricing the remaining physical supply risks.

Significance

Tom Baker/Vitol is one of the most credible voices in physical oil markets. As the head of the world's largest oil trader's Bahrain operations (covering Middle East flows), Baker has direct visibility into actual physical supply movements and buyer behavior. His warning that "the market is underpricing risks" at $95/bbl, combined with the specific highlight of China's demand return as a future price spike trigger, provides important corroboration of the Goldman/JPMorgan/Morgan Stanley demand destruction narrative. The ~4 mbd demand destruction figure is consistent with the EIA's -1.1 mbd figure for 2026, though Baker's figure may include broader global market effects.