"The world has burned through oil inventories at a record speed as the Iran war throttles flows from the Persian Gulf, eating into the very buffer that protects against supply shocks. The rapidly shrinking stockpiles mean that the risk of even more extreme price spikes and shortages is getting ever-closer, leaving governments and industries with fewer options to cushion the impact of the loss of more than a billion barrels of supply, two months into the near-closure of the Strait of Hormuz."
"Morgan Stanley estimates global oil stockpiles dropped by about 4.8 million barrels a day between March 1 and April 25 - far exceeding the previous peak for a quarterly drawdown in data compiled by the International Energy Agency. Crude accounts for almost 60% of the decline, and refined fuels the rest."
"Crucially, the system also requires a minimum level of oil, which means that the "operational minimum" is reached long before the inventories actually hit zero, said Natasha Kaneva, JPMorgan Chase & Co.'s head of global commodities research. "Inventories are acting as the shock absorber of the global oil system," she said. But "not every barrel can be drawn.""
"There are some signs that the drawdown may have slowed slightly in recent days, according to Goldman Sachs Group Inc., which pointed to weaker demand from China, the world's top oil importer - leaving more available for other buyers. Still, global visible oil stocks are already close to their lowest since 2018, the bank said."
Oil inventories are shrinking at a record pace as war-related disruptions throttle flows from the Persian Gulf and reduce the buffer against supply shocks. Stockpiles are being drawn down faster than prior quarterly peaks, with crude accounting for most of the decline and refined fuels making up the rest. The depletion raises the likelihood of extreme price spikes and shortages and keeps the market vulnerable for longer even after conflict ends. Inventories function as a shock absorber, but an operational minimum is reached before inventories hit zero, limiting how much can be drawn. Drawdown may be slowing due to weaker demand from China, yet visible stocks remain near the lowest levels since 2018.
#oil-inventories #persian-gulf-supply-disruption #strait-of-hormuz #oil-prices-and-shortages #global-commodities
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