The global economy cannot function smoothly without sufficient quantities of oil. For this reason, the fact that the global market is currently recording a massive "oil deficit" is causing intense concern among analysts and industry players. Since the beginning of the war with Iran, global oil consumption has consistently exceeded production, leading to a continuous depletion of both commercial inventories and strategic oil reserves internationally. As available stockpiles decrease at a rapid pace, experts warn that global demand will soon far outstrip supply, causing prices to skyrocket and triggering severe fuel shortages. Asia is expected to take the hardest hit due to its heavy reliance on Middle Eastern oil, though the repercussions will be felt across the entire globe.
Global reserves are being exhausted at a record rate
According to the International Energy Agency (IEA), global oil reserves are declining at an unprecedented speed and may reach critical levels before the peak of summer demand in July and August. As reported, global inventories fell by more than 250 million barrels between March and May, while onshore commercial and strategic reserves are decreasing at the fastest rate ever recorded. The head of the IEA's Oil Industry and Markets Division, Toril Bosoni, warned that continued withdrawals from reserves could lead to historically low levels right before the peak of summer consumption.
"The crisis is not a future scenario"
According to analysts, this is not a hypothetical crisis that might emerge at some point in the future. On the contrary, it is a development that is already underway and approaching rapidly. Baron Lamarre, former head of trading at Petronas, warned that the situation is currently manageable, but the increased demand of the summer months will likely lead to fuel rationing in certain parts of the planet. As he noted, if there is not soon an agreement to restore the smooth flow of supply, the market will face a "catastrophic" situation within the coming months.
US reserves at their lowest level in 20 years
Despite the fact that the United States is one of the world's largest oil producers, its available reserves are also showing a significant decline. According to recent government data, total US stocks of crude oil and petroleum products fell by 10.6 million barrels in a single week, reaching 1.57 billion barrels—the lowest level since 2004. This development has reinforced analysts' warnings that oil prices may see a new sharp rise within the coming weeks.
Record withdrawals from strategic reserves
The continuous release of quantities from the US Strategic Petroleum Reserve (SPR) has played a significant role in keeping prices in check. However, the data show that the recent withdrawals were the largest weekly releases in the reserve's history. Within one week, SPR stocks decreased by 9.1 million barrels, and they are now 36.2 million barrels lower compared to the same period last year.
Gasoline stocks are also collapsing
At the same time, a significant drop is being recorded in US gasoline stocks. At the beginning of February, American gasoline stocks stood at 259.1 million barrels. By late May, they had decreased by 47.5 million barrels in just 15 weeks. According to historical data from the US Energy Information Administration (EIA), this is the largest decline in gasoline stocks ever recorded during the February – May period. Experts clarify that this does not mean immediate gasoline shortages are imminent; however, it reveals that the market has already consumed huge amounts of reserves before the summer travel season has even fully begun.
The Strait of Hormuz at the center of the crisis
A decisive factor for the market's trajectory is the Strait of Hormuz, through which a significant percentage of global oil exports passes. Analysts estimate that if maritime traffic is not fully restored, shortages are considered inevitable. The only question is when they will be felt. An industry executive, speaking anonymously to Politico, mentioned that warnings have already been issued to the highest government echelons regarding what may happen from mid to late June. "We are already at dangerously low inventory levels," he stated characteristically, warning that many storage tanks are approaching the point of complete exhaustion.
Warnings for industrial shortages
Helima Croft, head of commodity strategy at RBC Capital Markets, argued that the decline in reserves constitutes a risk that is not yet fully visible. As she explained, if the situation in the Strait of Hormuz remains unchanged until September or October, then the global economy could face severe industrial shortages. According to her, today's prices may create the impression that the market is holding up, but the supply problems accumulating beneath the surface may manifest in a particularly painful way in the coming months.
Even an agreement will not immediately solve the problem
Energy sector experts point out that even if the United States and Iran were to reach an agreement immediately, fully restoring traffic in the Strait of Hormuz to pre-war levels would require six to eight months. This means that global energy supplies will continue to be constrained for a long period, regardless of the diplomatic developments of the coming days.
Concern over a new rise in prices
The continued decline in reserves, the uncertainty in the Middle East, and the difficulties in maritime transport are intensifying fears of a further increase in fuel prices, as well as the potential implementation of rationing measures in certain markets. Many analysts consider the de-escalation of the conflict and the reopening of the Strait of Hormuz to be prerequisites for avoiding a broader energy crisis. However, there are estimates that the conflict in the Middle East may escalate further, creating new pressures on the global economy and energy markets in the months ahead.
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