Key facts
- Oil storage levels in Cushing, Oklahoma, have fallen rapidly since the Middle East war began.
- Refiners are acquiring crude to substitute for lost supplies from the Strait of Hormuz.
- Phillips 66 anticipates Cushing's storage levels could reach their operational minimum.
- U.S. crude exports climbed to a record 5.6 million barrels per day in May.
- Overall U.S. crude inventories have slumped to 43.4 million barrels.
Oil storage tanks in Cushing, Oklahoma, a major global oil storage hub and the delivery point for West Texas Intermediate crude, are nearing their operational minimum. This situation is driven by refiners worldwide seeking to compensate for a significant shortfall in global supplies, exacerbated by the ongoing Middle East war and the effective closure of the Strait of Hormuz to tanker traffic. Refiners have been acquiring crude wherever possible to replace the approximately 20 million barrels per day that previously flowed through the strait. Since the conflict began, global supply has decreased by over a billion barrels. Phillips 66, a major refiner, anticipates that Cushing's storage levels could reach their operational minimum, a point not seen since the U.S. lifted its oil export controls in 2015. At such low levels, operational challenges like tank blending and outbound flow delays could arise. U.S. crude exports have surged to a record 5.6 million barrels per day in May, contributing to an overall slump in U.S. crude inventories to 43.4 million barrels, a 7.5% decrease since the war started. Executives from Exxon and Chevron have warned of rapidly falling global stockpiles and the potential for sharply higher oil prices in the coming months.