Global oil inventories are declining rapidly due to significant supply disruptions in the Middle East, particularly if the Strait of Hormuz remains closed. The International Energy Agency (IEA) has indicated that this situation could lead to higher oil and fuel prices as demand peaks this summer.
Exxon Mobil CEO Darren Woods noted that while the market has not yet fully felt the impact of these supply losses, due to existing commercial inventories and strategic reserves, these buffers will eventually diminish.
UBS reported that oil inventories fell from over 8 billion barrels at the end of February to 7.8 billion barrels by the end of April, with projections suggesting they could drop to 7.6 billion barrels by the end of May if demand remains steady.
JPMorgan analysts highlighted that while billions of barrels may seem substantial, only about 800 million barrels are readily available without straining the supply chain. They warned that if the Strait of Hormuz remains closed, inventories could plummet to critically low levels of 6.8 billion barrels by September, potentially leading to severe disruptions in transportation infrastructure.
However, analysts from Rapidan Energy believe that prices will rise sharply to reduce demand before inventories reach such critical lows, predicting a significant economic contraction could occur before the third quarter of 2026