Key facts
- Global oil inventories are running dangerously low.
- A deal to reopen tanker traffic through the Strait of Hormuz has proven elusive.
- Industry executives and analysts warn of another oil price shock in the coming weeks.
- Crude inventories and strategic reserve releases have kept oil prices somewhat under control.
- U.S. crude inventories fell to 791 million barrels in the week to May 29, their lowest since February 2024.
- Chinese seaborne crude imports in May hit the lowest level in nearly 10 years.
Global oil inventories are critically low, with warnings from industry executives and analysts that another oil price shock could occur in the coming weeks. Neil Chapman, Exxon Mobil senior vice president, stated that inventory levels are approaching unheard-of lows, and if draws continue, dated Brent crude could reach $150 or $160 a barrel. Crude futures have traded below $100 a barrel despite the Strait of Hormuz remaining effectively closed, with a deal to reopen tanker traffic proving elusive. The International Energy Agency's Toril Bosoni noted that critically low inventory levels could coincide with peak summer fuel demand. Mehmet Beceren of Rosenberg Research suggested a tipping point could be reached by the end of June, after which prices may rapidly appreciate. JPMorgan's Data Assets and Alpha group also predicted rapid price appreciation in the latter half of June unless throughput normalizes. In the U.S., crude inventories, including the Strategic Petroleum Reserve, fell to 791 million barrels in the week to May 29, their lowest since February 2024, and have fallen for eight straight weeks. Chinese seaborne crude imports in May hit their lowest level in nearly 10 years. Shohruh Zukhritdinov, an oil trader, believes the risk of a second price shock is real, potentially stemming from the exhaustion of inventory buffers rather than the initial closure of Hormuz itself. Morgan Stanley's Martijn Rats previously noted that meaningful export recovery through the Strait of Hormuz is not expected until the second half of July, citing safety concerns, tanker positioning, and constraints in restarting offline wells.