Global Oil Inventories Plummet Amid Hormuz Disruption, Asia Faces Shortages

Global oil inventories are declining at an unprecedented pace as the Strait of Hormuz remains effectively closed due to the Iran conflict, disrupting crude exports from the Persian Gulf and eroding global supply buffers. Data from Morgan Stanley shows inventories dropped by 4.8 million barrels per day between March 1 and April 25, the steepest quarterly drawdown in International Energy Agency records, with crude accounting for 60% of the decline.

Analysts from JPMorgan warn OECD stockpiles could reach "operational stress levels" as early as next month and hit "operational minimum" by September if the strait remains blocked. Goldman Sachs notes a slight easing in drawdowns due to weaker Chinese demand, but visible global stocks are already near their lowest since 2018. Jet fuel in Europe and refined products in Asia have seen severe tightening, with stocks at the Amsterdam-Rotterdam-Antwerp hub down a third since February.

Asian economies are facing growing pressure, with Indonesia, Vietnam, Pakistan and the Philippines identified as most vulnerable to shortages within weeks. Non-China Asia-Pacific inventories have fallen by 70 million barrels since the conflict began; Japan and India are at 10-year seasonal lows. While India's oil ministry states refinery crude stocks are adequate, refiners report significant drawdowns. Pakistan says it holds 20 days of refined product reserves.

US crude inventories, including the Strategic Petroleum Reserve, have declined for four straight weeks, with distillate stocks at their lowest since 2005 and gasoline near 2014 seasonal lows. Despite rising production, US exports are depleting reserves. In Europe, jet fuel supply is most strained, with further depletion expected as summer demand rises.

JPMorgan and Gunvor Group analysts warn that gasoline shortages may emerge first in Asia, while gasoil shortages could trigger macroeconomic shocks if the strait remains closed into June. The UK, Germany and France are particularly exposed. The court will resume hearing on Tuesday.