Analysts Warn of Potential Oil Price Surge as Global Stockpiles Dwindle

Market analysts are warning that global oil prices could rise significantly later this summer if the Strait of Hormuz, a critical shipping chokepoint, remains closed. While prices have recently defied predictions of larger increases, trading with Brent crude at $87.94 and near a three-month low, this stability is attributed to global stockpiles acting as a buffer against supply disruptions.

Experts caution that these stockpiles, which serve as market shock absorbers, are dwindling. Aaron Brady, an analyst with S&P Global Energy, stated that the world's reliance on inventories to manage supply disruptions "can't last forever." He projects that if the strait is not reopened within approximately a month, inventories in the U.S. and potentially other regions could reach minimum operating levels, leading to increased pressure on oil and gasoline prices.

Investment firm Macquarie estimates that Brent crude prices could climb to $130-$150 if the strait remains closed until Labor Day. The firm further projects that if the conflict extends into 2027, prices of around $200 may be necessary to balance supply and demand. Oil and gas executives have reportedly indicated that some inventories could be depleted within weeks, as storage cannot reach zero due to operational requirements for pipelines and refineries.

U.S. stockpiles, including both private commercial crude and the Strategic Petroleum Reserve, are decreasing rapidly, mirroring trends in other countries. Federal data shows U.S. commercial crude storage fell by over 7 million barrels to 426.5 million for the week ending June 5. This decline occurs even as the Trump administration has supplied the market with oil from the Strategic Petroleum Reserve. Rising U.S. oil exports, which help global markets offset the Strait of Hormuz bottleneck, are a contributing factor to this reduction, with Trump administration officials stating no consideration of export restrictions.

S&P Global Energy points out that inventories in the critical Midwest and Gulf Coast refining markets are currently at 351 million barrels. The firm estimates a "danger zone" begins around 325 million barrels, where the market becomes highly susceptible to logistical bottlenecks and price spikes.

According to Axios, President Trump stated on Thursday that a deal with Iran is imminent, though the outlook has fluctuated throughout the day.