Global oil stocks are nearing their lowest level in years, a leading U.S. bank warned on Monday, with estimates pointing to a mere 101 days of global demand.
Oil stocks are close to their lowest level in eight years, said Goldman Sachs, warning that the speed of depletion was becoming a concern as supplies through the Strait of Hormuz remained restricted.
Oil prices spiked again on Monday after reports of Iran hitting several ships in the Strait of Hormuz and setting a UAE oil port ablaze, as U.S. President Donald Trump’s attempt to use the Navy to free up shipping provoked the biggest escalation since a cease-fire was declared four weeks ago.
Early on Tuesday, Brent crude futures fell 1.3% to $112.93 a barrel while U.S. crude slid 2.3% to $104 per barrel, after both jumped in the previous session on heightened worries about supply disruption.
Meanwhile, Goldman estimated that total global oil stocks stood at 101 days of global demand and could fall to 98 days by the end of May.
It added that while total global stocks are “unlikely to hit minimum operational levels this summer, the speed of depletion and supply losses in some regions and products is concerning.”
The bank estimated that global commercial refined products stocks have drawn down from 50 DoD (days of demand) before the U.S.-Israeli war on Iran to 45 DoD now. The bank added that easily accessible refined products buffers were fast approaching very low levels.
The chairperson and CEO of U.S. energy giant Chevron, Mike Wirth, speaking in a panel on Monday, similarly warned of potential shortages.
He said that physical shortages in oil supply would begin appearing around the world because of the closure of the Strait of Hormuz.
Economies will begin shrinking, first in Asia, as demand adjusts to meet supply while the strait remains closed because of the U.S.-Israeli war with Iran, Wirth said.
