Oil inventories in Asia have plummeted to their absolute minimum operational limits, while Europe is projected to follow shortly and the US risks facing severe supply shortages as early as July, warned Jeff Currie, head of energy pathways strategy at Carlyle. Speaking to CNBC on the sidelines of the UBS Wealth Conference in Singapore, Currie argued that the global energy market is under intense strain due to the war involving Iran and severe disruptions to maritime transport through the Strait of Hormuz, which have drastically restricted Middle East energy exports.
Global oil inventories present a misleading picture
As he explained, aggregate data on global oil inventories paint a highly misleading picture, given that a vast portion of stored crude cannot be readily drawn down by the market. Significant volumes are continuously required to maintain the baseline safe operations of pipelines and storage facilities, leaving only a highly restricted fraction of stockpiles genuinely available for immediate commercial consumption. "Asia is already trading extremely close to its minimum operating inventories," Currie remarked, adding that Europe will almost certainly be the next region to experience acute market pressure.
Severe warning issued to Europe and the US
"Europe could start experiencing supply issues immediately following the bank holiday. Asia is already there. For Europe, give it about another month, and look to July as the trouble window for the US," he noted. He described already pronounced distortions across refined product pricing, pointing out that wholesale diesel prices have now overtaken even the cost of aviation fuel. "We have witnessed explosive surges across product prices. Jet fuel lost momentum, but now diesel outpaces jet fuel. The inventory problem here in Singapore persists; it has simply rotated from aviation fuel directly into diesel," he stated.
Europe relies heavily on American crude reserves
According to Currie, the temporary supply relief that Europe currently enjoys is driven primarily by elevated US petroleum exports, facilitated by aggressive stock releases from the American Strategic Petroleum Reserve (SPR). However, he warned that this emergency distribution model cannot be sustained indefinitely. "Virtually all the crude being drawn down from the US Strategic Petroleum Reserve is being exported straight to Europe. European nations believe they are insulated from the crisis because they are absorbing massive US oil volumes, but this stopgap measure cannot continue," he observed.
International Energy Agency echoes supply warnings
His stark assessments closely follow recent emergency warnings issued by the International Energy Agency (IEA), which stated that the global oil market faces a severe supply crunch during the peak of summer demand. IEA chief Fatih Birol previously warned that the market could enter a highly disruptive "red zone" in July or August unless regional conditions optimize and Middle Eastern export routes are fully restored.
Fuel tax cuts will not resolve a structural crisis
Currie simultaneously dismissed proposed political interventions, such as suspending the US federal fuel tax, emphasizing that fiscal maneuvers fail to address the core macroeconomic issue of a physical supply deficit. "Tax holidays solve absolutely nothing. The only viable path to resolving this crisis is to directly expand the availability of physical crude oil," he emphasized.
The Strait of Hormuz and Iran's growing geopolitical leverage
In his view, fully restoring transit access through the strategic Strait of Hormuz represents the sole permanent solution for market stabilization, though even under a resolution scenario, significant time will be required for global supply balances to normalize. Furthermore, he estimated that the continuous erosion of global stockpiles is dramatically amplifying Iran's geopolitical bargaining power. At the same time, US President Donald Trump has reportedly instructed his negotiating team not to rush a diplomatic accord with Iran to end the war and reopen the trade channel. "With each passing day, Iran's negotiating leverage strengthens because global oil inventories continue to deplete," Currie argued, concluding that "Tehran's diplomatic position has quite literally never been stronger at any point over the last 47 years."
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