The World Is Burning Through Its Oil Safety Net

[Zorro]

Global oil inventories have fallen at a record pace during the Iran war

An underappreciated surplus of crude oil, sloshing around storage tanks and aboard ships, cushioned the global economy when the Persian Gulf closed 2½ months ago.

That excess supply is now dwindling at a record pace, with oil executives and analysts predicting that a harsh reckoning is set to upend the relative calm in energy markets. Acute shortages of key fuels and soaring prices could emerge within weeks if the Strait of Hormuz remains shut.

The drawdown in private storage and government strategic reserves along with a fall in demand due to the higher prices, has bought time and prevented oil prices from exploding. But it has left little margin for error in the months ahead.

“You can only decrease consumption so much, and when inventories run out, they are going to run out,” said Ellen Wald, senior fellow at the Atlantic Council’s Global Energy Center. “At some point the market is going to collide and prices are going to shoot up.”

Global oil inventories—which include onshore tanks and oil floating on tankers at sea, and are a measure of the slack in energy markets—have fallen at a record pace since the start of the war. They plunged by 250 million barrels over March and April, according to the International Energy Agency, a Paris-based club of energy consuming nations. That is equal to around 2½ days of global oil use.

https://www.wsj.com/business/energy-oil/the-world-is-burning-through-its-oil-safety-net-ebf9d4fa?st=L2Wvj8&reflink=desktopwebshare_permalink

[dalton99a]

1. Americans will have a very shitty summer