Disruptions in the Strait of Hormuz are pushing global inventories toward operational ‘stress’ and ‘floor’ levels, the outlet has reported
Global oil inventories are shrinking at the fastest pace on record amid continuing disruptions in the Strait of Hormuz, Bloomberg has reported.
The outlet cited data from Morgan Stanley on Saturday showing that global oil stockpiles fell by about 4.8 million barrels per day between March 1 and April 25. The figure surpasses previous inventory drawdown records tracked by the International Energy Agency, it added.
The Strait of Hormuz off Iran’s coast normally carries about one-fifth of the global oil and LNG trade. Tanker traffic through the waterway has remained heavily disrupted following the US-Israeli military campaign against Iran and repeated accusations by both sides of violating a fragile ceasefire.
On Friday, US President Donald Trump warned that Washington may revive and expand “Project Freedom,” a naval operation in the Strait of Hormuz, if a peace deal is not reached with Iran. US Secretary of State Marco Rubio warned that military options remain on the table if diplomacy fails.
Read more Hormuz akin to ‘atomic bomb’ – Iranian supreme leader’s adviserIf disruptions continue, commercial oil inventories could fall to “operational stress levels” by June and reach “operational floor” levels by September – meaning stockpiles would approach the minimum volumes needed to keep pipelines, export terminals, and refineries functioning efficiently, Bloomberg wrote.
The US, which has increased crude and fuel exports to offset global supply disruptions, has also been drawing down its domestic inventories, Bloomberg noted. According to Energy Information Administration data, US fuel stockpiles recently fell to 11% below the five-year seasonal average. Despite President Trump’s claims that the US “doesn’t need” the Strait of Hormuz, the country still imports some crude oil from Persian Gulf producers.
READ MORE: Fight or flight: How the global jet fuel crisis could ground you
The disruption of Gulf oil flows has reinforced the importance of Russian energy supplies despite a push by the EU to phase out imports of fossil fuels from the sanctioned country. According to media reports, Brussels has delayed plans for a permanent ban on Russian oil amid concerns that removing more crude from the market could tighten fuel supplies and push energy prices higher across the bloc.
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