U.S.-Iran Agreement "Reached," but U.S. Crude Oil Inventories Are Already Approaching the Red Line and It Will Take Months to Replenish
```
The US-Iran agreement paves the way for reopening the Strait of Hormuz, but whether this can promptly curb the accelerated depletion of global oil inventories will determine the direction of energy prices in the coming weeks.
According to a Wallstreetcn article, both the US and Iran announced a ceasefire memorandum of understanding, with Trump authorizing the “free opening” of the Strait of Hormuz and lifting the naval blockade. The official signing ceremony is set for June 19 in Switzerland.
However, according to the latest Wall Street Journal reports, energy industry executives have issued warnings: During the more than 15 weeks of blockade, the world has consumed hundreds of millions of barrels of strategic and commercial reserves. Inventories are now nearing historically dangerous lows; even if the strait reopens immediately, it will take months for the market to return to normal.
Several industry executives bluntly described the situation as severe. ExxonMobil Senior Vice President Neil Chapman said that the US is approaching “unprecedented inventory levels.” Chevron CEO Mike Wirth has repeatedly warned publicly that supply shortages will soon become apparent globally.
Both strategic reserves and commercial inventories are critical
Since late March, the US has drawn about 66 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). SPR is a salt-cavern storage system built along the Gulf of Mexico, created after the Arab oil embargo in 1975, with peak reserves exceeding 700 million barrels in 2009.
The Trump administration has authorized a release of 172 million barrels. According to the Wall Street Journal, if the current pace continues, this quota could run out as early as early September. At that point, the SPR inventory would drop to about 243 million barrels, an all-time low.
The significance of this number is not just in the quantity itself. The core function of the SPR is to provide the US with a buffer against sudden supply interruptions or natural disasters like hurricanes. If reserves are largely depleted, America's flexibility in future energy crises will be greatly reduced.
Commercial oil storage is also under pressure. The US crude oil pricing hub in Cushing, Oklahoma, saw inventories fall to 21 million barrels, decreasing by about 1 million barrels in the past week.
John Auers, Managing Director of Refining Fuel Analytics at RBN Energy (a subsidiary of Novi Labs), pointed out that storage tanks typically need to retain 10% to 15% of capacity to maintain normal operations—this is due to the physical limitations of outlet positions and sediment at the tank bottom. When Cushing stocks fall to around 20 million barrels, operators will begin to encounter a series of operational difficulties.
“Once you hit the tank bottom, the entire operation comes to a standstill,” Auers said. He also noted that 20 million barrels is not an absolute hard threshold; operators may still try to keep extracting, but the pace will slow markedly.
US energy executives’ statements are pessimistic
The report notes that facing this situation, energy executives’ comments are far more pessimistic than those of government officials.
Neil Chapman said at an industry conference in New York: “You can debate whether this critical point will arrive in two or three weeks, but once it hits, prices will soar dramatically.”
Wil VanLoh of Quantum Capital Group was more direct: “Things are going to get ugly.” He added, “There has never been a precedent for wiping out 10 million barrels of oil demand in a single day globally”—referring to crude oil that could not reach global markets due to the strait blockade.
Chevron CEO Mike Wirth expressed doubt about Energy Secretary Chris Wright’s claim that “7 million barrels of oil and gas products a day are still passing through the strait with US military assistance.” “Our assessment is that the actual number may not be that high,” he said.
Additionally, reports indicate that US Energy Secretary Chris Wright said last week that Trump has been briefed about the inventory situation and the government expects no drastic increase in energy prices. “I don’t think so... We face challenges, but I think we’re addressing them,” he said.
White House spokesperson Taylor Rogers said: “When the President achieves a successful outcome in this conflict, oil prices will fall to multi-year lows and the global energy market will be more stable in the long term.”
However, the report also pointed out that many uncertainties remain about the deal itself. Trump said that mines must be confirmed cleared before the strait reopens. Tanker operators and their insurers are expected to remain cautious about resuming transit.
More importantly, this agreement only lays the framework for subsequent tough nuclear negotiations; the US demand for Iran to hand over or dilute highly enriched uranium remains unresolved. If substantial progress isn’t made in nuclear talks, long-term security in the strait will remain in doubt, and oil market uncertainty will continue.
Risk warning and disclaimerThe market has risks, invest with caution. This article does not constitute individual investment advice and does not consider individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their circumstances. Investing accordingly is at your own risk. ```