The U.S. Energy Information Administration warned Tuesday that oil stockpiles across the world's largest economies are heading toward their lowest levels in more than two decades, driven by the loss of output stemming from the war involving Iran.
OECD stockpiles are on track to hit their lowest level since 2003 by December, creating conditions for higher prices
Photo: Morteza Nikoubazl (Getty)
The U.S. Energy Information Administration warned Tuesday that oil stockpiles across the world's largest economies are heading toward their lowest levels in more than two decades, driven by the loss of output stemming from the war involving Iran.
By December, OECD-wide oil stockpiles are on course to slip below 2.3 billion barrels — a threshold the agency has not recorded since it first began compiling the data in 2003, according to the monthly Short-Term Energy Outlook. Filling the gap left by roughly 11 million barrels per day of lost Middle Eastern output has pushed the pace of the drawdown to levels not previously recorded, Reuters reported.
The EIA's projections rest on an assumption that marine traffic through the Strait of Hormuz — a chokepoint that handles roughly 20% of global oil shipments — is unlikely to return to pre-conflict levels before early 2027. "Because of the size of the drawdown in global inventories, we forecast that oil prices will remain elevated until global oil flows return to normal levels and oil inventories are replenished," the agency said.
The EIA put the spot-market average for Brent at roughly $105 a barrel over June and July — a figure that compares with Tuesday's futures settlement of around $91.60.
The agency also said that reports of a potential U.S.-Iran agreement to reopen the strait had not yet produced a finalized deal. "Most oil production in the region remains shut-in, and global oil inventories have continued to fall to meet demand," the EIA said.
A combination of elevated prices, constrained fuel access, and official conservation programs is forecast to pull worldwide consumption lower in 2026 — marking the first year-over-year drop since the pandemic cratered demand in 2020. The projection stands in sharp contrast to what the agency had previously anticipated: a modest 200,000-barrel-per-day gain in consumption.
Senior executives at major oil companies have raised alarms about record-low inventory levels and a coming price spike in recent weeks. ExxonMobil $XOM senior vice president Neil Chapman said at an industry conference that physical Brent prices could climb to between $150 and $160 a barrel once stockpiles hit historic lows. Chevron $CVX CEO Mike Wirth offered a similar warning, saying the "buffers and shock absorbers" in the global market were being steadily drawn down.
Futures markets have remained comparatively contained, with traders pricing in the possibility of a negotiated deal to restore shipping through the strait.
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