Global crude oil and product stockpiles are experiencing record drawdowns this month, shrinking by an unprecedented $8.7 million barrels a day. This rate is nearly double the average pace since the beginning of the Middle East conflict, as reported by Goldman Sachs Group Inc. bloomberg.com
In the U.S., oil inventories at Cushing, Oklahoma, the largest commercial crude storage hub, have fallen for eight consecutive weeks to approximately $20 million barrels. This level is considered the operational minimum by most traders, echoing a similar situation seen in 2014. Surging exports, primarily driven by the Iran war, are draining American supplies. bloomberg.com
The U.S. Strategic Petroleum Reserve (SPR) has hit a 43-year low, a consequence of the Iran conflict and the closure of the Strait of Hormuz. The SPR had also been drawn down earlier to mitigate the oil-price impact of the Russia-Ukraine war, reaching levels last seen in mid-2023. This critical shortage is further exacerbated by the closure of the Strait of Hormuz, which has prevented oil from exiting the Middle East for almost four months, resulting in a loss of $1.15 billion barrels of oil supply globally. bloomberg.com, bloomberg.com, cnn.com
While the Strait of Hormuz has reopened, industry experts suggest it could take months for oil flows to normalize. The global oil market remains precarious, with some analysts warning of critically low supplies within weeks. The International Energy Agency predicts that even if global production exceeds demand by nearly $5 million barrels, it would take approximately a year to replenish the $1.15 billion barrels of lost supply. This lag could lead to significant oil price increases, despite recent declines. cnn.com
