Global oil buffer stocks depleting at record pace amid Iran war

Global oil inventories are shrinking at a record rate as the war in Iran disrupts shipping in the Persian Gulf, rapidly eroding the buffer stock designed to absorb supply shocks. This sharp decline signals a growing risk of extreme price spikes and supply shortages. With the Strait of Hormuz effectively blockaded for two months, governments and industries have dwindling options to counter a supply loss of over one billion barrels. The rapid depletion of stocks means the market will remain vulnerable to future supply disruptions for an extended period, even after the conflict ends. Morgan Stanley estimates that from March 1 to April 25, global oil inventories fell by an average of about 4.8 million barrels per day, a rate that far surpasses the highest quarterly decline ever recorded by the International Energy Agency (IEA). Approximately 60% of the reduction was in crude oil, with the remainder being petroleum products. Natasha Kaneva, Head of Global Commodities Research at JPMorgan, noted that the oil system requires a minimum inventory level and will reach an untouchable safety stock limit before inventories are fully depleted.