Global markets are in a frenzy, but the oil market remains as dire as at the start of the war: global inventories are approaching historic lows.

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Global oil inventories are being depleted at a record pace. While global stock markets celebrate historic highs, the crude oil market is telling a very different story.

Goldman Sachs data shows that since April, global visible oil inventories have been consumed at an average rate of 6.3 million barrels per day. If invisible inventories are included, the daily consumption surges to 10.9 million barrels—a single-month peak since 2017. Since the outbreak of the Persian Gulf conflict, the estimated cumulative oil consumption worldwide has reached 474 million barrels. With the volume through the Strait of Hormuz still at about 10% of normal levels, this momentum of consumption is unlikely to be reversed in the short term.

Inventory Crisis: Record Consumption Speed

Brent crude prices have remained unusually stable over the past week, generally holding in the high range around $90 per barrel.

Goldman Sachs analysis suggests this stability results from a combination of three factors: lower geopolitical risk premium, market pre-emptive destocking ahead of expected reopening of Hormuz, and a temporary weakening of spot procurement demand.

The combination has suppressed prices, and both futures, spot, and refined oil prices have retreated since the ceasefire—even though actual Hormuz flow remains extremely low and global inventory consumption is still extreme.

The pressure is clearly visible in the data.

Since April, global visible oil inventory consumption has averaged 6.3 million barrels per day. If "invisible" refinery inventories from non-OECD countries are included, Goldman Sachs estimates the total average daily consumption in April reached 10.9 million barrels, the highest single-month rate since 2017. Since the outbreak in the Persian Gulf, the total estimated consumption has reached 474 million barrels.

Currently, including pipeline rerouting, Persian Gulf oil flows have dropped to 9.3 million barrels per day, only 40% of normal levels. Since the US blockade began on April 12, flows have declined by about 2.6 million barrels per day. Iranian oil exports have plunged to roughly 300,000 barrels per day.

Goldman Sachs expects that even if Hormuz fully reopens, capacity restart, tanker transit times, and pipeline logistics bottlenecks will make flow recovery gradual. Global inventory declines could extend into May or even longer.

Notably, inventory drawdowns have a natural lower limit. Once inventories hit their operational minimum, if supply cannot be restored, the only rebalancing mechanism will be demand destruction.

Spot and Futures Diverge: Price Signals Become Chaotic

The oil market's pricing system is sending confusing signals.

Extreme inventory depletion means that if the market perceives supply interruption as short-lived, spot delivery prices will far exceed forward prices, resulting in deep backwardation on the futures curve. This is the core reason for the recent apparent divergence between spot and futures prices.

Measured by EFP (futures-to-physical premium), Brent futures-physical delivery premiums over the past two months have never exceeded $2 per barrel. However, the spot Brent (Dated Brent) premium over nearby futures (DFL indicator) has eased from a high near $40/bbl, but remains as high as $10/bbl.

Goldman Sachs believes that the shift from panic hoarding in March to active destocking in April is the primary reason for spot market price stability. According to reports, some Asian refineries—especially Chinese ones—have relisted previously purchased crude for sale. However, this destocking is not sustainable. When inventories reach their lower bound, the spot market will face a new, even sharper price shock.

Record US Exports, but Growth Nears Its Limit

The only bright spot on the supply side comes from the US. US oil exports have surged to a record 12.7 million barrels per day, and May shipping data suggests exports may climb further.

However, some key Texas pipelines are already running at or above full capacity, meaning US export growth potential is now very limited.

Global on-the-water crude buffers are also nearing exhaustion: unsanctioned on-the-water crude is near historic lows; Russian crude imports have dropped below the expected 2025 average; and US waivers on Iranian on-the-water crude imports have expired without renewal.

Goldman Sachs warns that, despite two-way risk to benchmark oil price forecasts, an unexpectedly prolonged Hormuz blockade and more persistent Middle East supply losses would bring significant net upward pressure. For investors ignoring oil market risks alongside bullish stock market sentiment, this may be a warning that cannot be ignored long term.

Risk Disclaimer and Liability ClauseMarkets involve risk, investment should be cautious. This article does not constitute personal investment advice and does not take into account individual investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Invest accordingly, at your own risk. ```