When will global crude oil inventories "bottom out"? This is the "shutdown timetable."

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When will global crude oil inventories "bottom out"? JPMorgan has calculated a countdown curve.

In early April, JPMorgan commodities analyst Natasha Kaneva released the latest report, systematically calculating the speed at which global crude oil inventories would be depleted under the impact of a Hormuz Strait blockade and provided a complete timetable from "bottoming out" to "rebuilding." The conclusion is direct: inventory buffers are being rapidly consumed, and the market is not far from the "operational minimum"—the bottom may come in May.

What is the "Operational Minimum" and Why Is It the Red Line?

To understand this report, one must first understand a key concept: Operational Minimum.

This is the functional bottom line for inventories, not a literal "emptying." Kaneva defines it as OECD commercial inventories sufficient to cover about 30 days of forward refining demand, equivalent to about 842 million barrels.

Below this level, refinery scheduling, logistics coordination, and market liquidity will start to have problems. In theory, the system could last down to 24 days of cover (engineering minimum), but that would mean severe operational pressure and liquidity collapse.

This is like the fuel tank not being empty, but the dashboard warning light is on—the car can still drive, but may break down at any moment.

Once inventory approaches this threshold, price, rather than inventory itself, will become the market’s main balancing mechanism—that is, high oil prices will forcibly suppress demand, with price replacing inventory as the main buffer.

Countdown: When Does Inventory Bottom Out? Maybe as Early as May

JPMorgan’s calculations show this shock is much larger than previous ones.

A Hormuz Strait blockade would cause an effective supply loss of about 14 million barrels per day (14 mbd). By comparison, when the Russia-Ukraine conflict broke out in February 2022, OECD commercial crude inventories had already dropped to about 968 million barrels, only enough to cover 27 days of forward refining demand, and were already in a fragile state.

This shock is greater and the buffer is thinner. Kaneva’s calculation process:

April: OECD commercial crude inventories decrease by about 166 million barrels
Early May: Another 67 million barrels drawn down
Inventories then reach the 842 million barrel operational minimum

Pressure on demand is already evident. In Asia, middle distillates and jet fuel demand saw the most prominent destruction, which matches the geographical transmission path of the supply shock—Asian buyers closest to the Persian Gulf feel the pressure first.

Supply Recovery: Three-Stage Roadmap

Even if the Strait reopens, supply won’t immediately return. JPMorgan set out three stages:

First Stage (Weeks 1-3): Cautious reopening, recovering about 6.3 million b/d—about half the shut-in production

Even if a ceasefire is reached, shipowners, port operators, and crews need confirmation of safety before returning to the Gulf. JPMorgan expects shipping companies will require about two weeks to confirm that risks have subsided.

Specific pace:

Week 1: Supply increases by 1.7 million b/d, producers cautiously ramp up, avoiding a hasty surge
Week 2: Another 2.3 million b/d added; success in the first week boosts confidence
Week 3: Another 2.3 million b/d, as safety expectations stabilize and operational plans are gradually implemented

High war risk insurance premiums, congestion at loading ports, and priority buyers (especially in Asia) rushing to lift cargo will all constrain the speed of early recovery.

Second Stage (Weeks 4-8): System normalization, recovery to 29.3 million b/d

By the end of the second month, Gulf supply recovers to 29.3 million b/d, still about 3.4 million b/d below prewar levels.

Recovery rates vary by country:

Saudi Arabia: Nearly full recovery, supported by scale advantage and alternative export routes
UAE: Recovers to 95%, similar dynamics, but still depends on full operational recovery
Iraq, Kuwait: Recover to about 80%, hampered by tank-driven field shutdowns and restart logistics. Iraq’s southern export systems (Basra Oil Terminal, Khor al-Amaya) have been interrupted many times; alternative routes (Kirkuk-Ceyhan) can only compensate partially. Kuwait Petroleum Corporation (KPC) guidance shows that even after a ceasefire, full recovery will take several months.
Qatar: Only 60% recovery; Ras Laffan and related facilities severely damaged. LNG and associated liquids (condensate, NGL) repairs will take several years. QatarEnergy has quantified losses for condensate, LPG, naphtha, sulfur, helium, etc.

Third Stage (Month 3-4): Closing the output gap, recovery to 99% of prewar levels

Month 3: Supply recovers to 31 million b/d, still about 1.7 million b/d shy of prewar
Month 4: Overall recovery to about 99% of prewar levels

By then, Saudi Arabia and the UAE will be back to full capacity. Iraq recovers to 90%, Kuwait to 80%, and Qatar to 77%—the latter limited by Ras Laffan/GTL infrastructure damage, with full repairs expected to take 3 to 5 years.

Iran is another long-tail risk. The South Pars gas field has been attacked, and condensate and NGL supply chains are affected. Due to the high integration of gas treatment, liquid recovery, and downstream petrochemical systems, recovery of condensate and NGL production will lag upstream restarts. JPMorgan expects that by the end of month 4, Iran's output will still be about 200,000 b/d below prewar levels.

Inventory Rebuild: How Much Longer?

Post-supply recovery, inventories won’t rebound immediately.

JPMorgan estimates it will take about two months after the Strait reopens for OECD commercial inventories to start rebuilding. To return to the normal 30-day forward refinery demand cover, another 150 million to 200 million barrels need to be replenished.

At the rate of 30 to 45 million barrels per month (about 1 million to 1.5 million b/d), the full replenishment cycle will take about four months.

In other words, even if the Strait were to reopen tomorrow, the global crude market would not truly return to normal until half a year later.

Risk DisclaimerThe market carries risk; investments require caution. This article does not constitute individual investment advice and does not take into account any specific user's investment objectives, financial situation, or needs. Users should consider whether any views, opinions, or conclusions in this article are suitable for their particular situation. Investments based on this are at your own risk. ```