Global oil inventories are rapidly declining, with analysts warning that Europe could face physical shortages as soon as the end of May 2026. Jeff Currie, from Abaxx Commodity Exchange, highlighted that the current supply crunch is not yet reflected in oil prices or comments from policymakers, suggesting that once shortages occur, prices could surge dramatically.
He noted that the oil market is currently in a low-demand period, but upcoming holidays in the U.S. and U.K. will likely increase demand for diesel and gasoline, exacerbating the situation. Analysts from Societe Generale, led by Mike Haigh, described the oil market as being under a "veneer of stability," while the underlying system is under significant stress due to rapidly depleting inventories.
They pointed out that the ongoing U.S.-Iran conflict has severely restricted oil flows through the Strait of Hormuz, which typically accounts for about 20% of global oil supply. Even if the Strait reopens soon, the complex logistics of getting oil back online would delay relief by at least 52 days.
A later reopening could push oil prices toward $150 per barrel and prolong tightness in the market until 2027. On May 18, 2026, Brent crude prices rose to $110.73 per barrel, while U.S. West Texas Intermediate futures reached $106.86, indicating growing concerns over supply availability rather than just price.
Currie emphasized that the critical issue is not the price of oil, but its availability, as the situation remains precarious