Global oil inventories are critically low: Is a real energy crisis set to erupt within a month?

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Global oil inventories are being depleted at a pace that the market can no longer ignore. Several top Wall Street institutions warn that if the blockade of the Hormuz Strait continues into June, the energy market will swiftly plunge from surface calm into a structural crisis—regional supply catastrophes may arrive sooner than most anticipate.

Peace talks remain stalled, oil futures continue trading above $100 per barrel, and the U.S. April CPI rose 3.8% year-on-year, nearing a three-year high and pressuring stock markets. Morgan Stanley warned this week that the oil market is at a critical "race against time" juncture; if Brent crude is forced to "perform the pricing correction previously avoided," it could surge to $130–$150 per barrel in the worst-case scenario.

Goldman's latest research reveals deeper risks: macro-level "aggregate safety" is masking micro-level "structural crisis"—naphtha, LPG, and jet fuel face the most urgent shortage pressures, and Asia-Pacific (excluding China) and Europe will be hit first. JPMorgan analysts warn that commercial crude inventories in developed countries may approach operational stress thresholds as early as early June.

Global Inventories: Appearing Safe, Actually Alarming

Goldman estimates global total oil inventories (including commercial and strategic, onshore and offshore, crude and refined products) currently equal about 101 days of worldwide demand, down 4 days from 105 days at the end of February. At the current depletion rate of about 3 days per month, this is projected to fall to 98 days by the end of May.

This figure is still above two key warning lines: the EU’s requirement for member states to maintain at least 61 days of emergency reserves, and the estimated onshore minimum operating inventory of roughly 30–40 days for the global oil system.

However, Wall Street institutions’ assessment numbers themselves diverge significantly—Morgan Stanley estimates global commercial and strategic crude inventories at 5.75 billion barrels, Société Générale around 7.8 billion barrels, JPMorgan roughly 8.2 billion barrels, all combining official and private data, and well below the 2020 peak of about 9 billion barrels.

Antoine Halff, researcher at Columbia University’s Center on Global Energy Policy and cofounder of geospatial analytics firm Kayrros, points out that inventory depletion "is highly uneven across regions and types, with the greatest decrease precisely in areas with the lowest market visibility."

He says Asia-Pacific (excluding China) crude inventories have fallen by about 12% since the February 28 conflict outbreak, hitting the lowest levels in at least a decade. Goldman also warns that even if Hormuz exports resume quickly, global visible refined product inventories could reach the lowest levels since 2018, since fully normalized deliveries still require several weeks.

Refined Products: Fastest Depletion, Highest Risk Segment

Goldman’s report clearly states: among all inventory categories, onshore commercial refined product stocks are the fastest-depleting, least visible, and highest-risk segment.

Goldman estimates global commercial refined product inventories have rapidly dropped from pre-war 50 days of demand to the current 45 days. Non-OECD refined product stocks plunged from 49 to 43 days—a 10% drop, making it the most heavily depleted segment; OECD refined product stocks fell from 40 to 38 days, a roughly 5% decrease. In contrast, global onshore commercial crude inventories are roughly stable at about 39 days, providing some buffer for countries with refining capacity.

Goldman forecasts OECD commercial oil inventories will fall to 57 days of demand by June, the lowest since 2018, though still above the historical average of about 53 days during 2000–2005, before the shale oil revolution. Notably, China and Singapore are rare regions where refined product stocks have increased, mainly due to reduced exports.

Asia-Pacific: Alternative Imports Only Fill Part of the Gap

Asia-Pacific is the biggest victim of this supply shock. In April, oil imports from the Persian Gulf to Asia-Pacific plunged by 11 million barrels per day year-on-year, resulting in a more than 40% drop in total regional imports.

In response, refined products and crude face notably different situations in Asia-Pacific.

For refined products, by cutting exports, the region filled about 70% of the Persian Gulf import gap, with net imports only declining by about 700,000 barrels per day; for crude, alternative suppliers could fill less than 40% of the gap, leading to a 7 million barrel per day year-on-year fall in net crude imports in April—directly constricting domestic refining and refined product supply.

Goldman believes, considering national crude inventory levels, South Africa and India face the highest risk of refined product shortages. The recent geographic distribution of news reports suggests the center of acute shortage news has shifted from Thailand and India a month ago to Malaysia and Bangladesh recently, confirming the continued outward spread of supply shock.

Europe: Jet Fuel Shortage Alert May Hit as Soon as June

Europe's most urgent threat comes from jet fuel.

Goldman, together with European energy and transport equity analysts, estimates that assuming Persian Gulf export flows normalize before the end of June, jet fuel demand falls by 3%, and a 50% import substitution rate, European commercial jet fuel stocks (excluding government emergency reserves) may fall below the IEA’s 23-day critical shortage threshold in June.

The UK is seen as Europe’s country facing the highest jet fuel rationing risk, due to its highest dependency on net imports. France and Germany, though overall inventories seem sufficient, have 70–75% of reserves as government emergency stocks, with commercial coverage only 16 and 17 days, both below the IEA’s 23-day critical threshold. Real-time weekly data from the ARA region (Amsterdam–Rotterdam–Antwerp) also confirm this assessment—jet fuel inventories are being depleted rapidly.

On the demand side, JPMorgan data shows global oil demand in March dropped by an average of 2.8 million barrels per day, widening to 4.3 million barrels per day in April, and is expected to expand further to about 5.5 million barrels per day in May. The International Energy Agency had earlier in March coordinated the release of 400 million barrels of strategic reserves, with the US Strategic Petroleum Reserve (SPR) providing nearly half.

Energy Giants Warn in Unison, Market Entering Countdown

According to Bloomberg, a team led by Morgan Stanley strategist Martijn Rats warned in a Monday report that if the blockade persists into late June or even July, Brent crude will "be forced to perform the price correction work it previously managed to avoid." Its baseline scenario projects Brent staying at $100 per barrel in Q3, dropping to $90 in Q4, and falling to $80 in 2027; but in the worst case where US and China buffer reserves are exhausted, Brent could surge to $130–$150 per barrel before a ‘rescue reopening’ arrives.

Saudi Aramco warned on Monday that if the strait blockade continues for several more weeks, market rebalancing may extend to 2027 and "oil supply challenges" will persist. This echoes remarks earlier this month by US energy giants ExxonMobil and Chevron—both companies saw lower profits in the latest quarter, and executives highlighted market dislocation caused by the conflict.

Swissquote analyst Ipek Ozkardeskaya warns that if the Middle East war does not end quickly, the world—including G7 developed countries—"will begin to face oil shortages."

JPMorgan analysts stated in a recent report that one of their framework's "core assumptions" is that the accelerated depletion of inventories will eventually force a reopening of the Hormuz Strait by some means—but they also caution, even after conflict ends and tankers resume transit, it will still take weeks for the market to return to normal flows, and a risk premium for potential renewed disruptions will persist.

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