2 weeks ago
World Oil Stocks Face Six-Month Survival Test Amid US-Iran War
Oil is stored in big tanks and underground reserves around the world so countries can use it in emergencies.
A war between the US and Iran is stopping oil from reaching the countries that need it.
Every day, about 5 million barrels of oil that the world needs are missing.
A big oil company called Saudi Aramco says the world has lost about 2.6 billion barrels since the war started.
Emergency oil held by the International Energy Agency could cover this missing oil for only about six months.
The United States has less emergency oil than before, with its reserve at the lowest level in over 40 years.
Some of the US oil cannot be released quickly, which makes the problem worse.
Diesel and jet fuel are also running low because refineries in the Middle East were damaged.
China may be in the best position because it is estimated to have a very large stockpile of oil.
If the war continues for another six months, the world's oil safety net could become dangerously thin.
Analysts estimate the real global supply gap from the US-Iran war at about 5 million barrels per day, while Saudi Aramco says Gulf disruptions removed about 11 million barrels per day.
Saudi Aramco chief Amin Nasser estimates the world has lost around 2.6 billion barrels of oil since the war began, the largest cumulative disruption since the 1979 Iranian revolution.
Government-controlled emergency stocks of about 900 million barrels could cover roughly six months (about 180 days) of the assumed 5-million-barrel-per-day shortfall.
The US Strategic Petroleum Reserve is at its lowest level in more than four decades, with Rapidan Energy estimating roughly a quarter of it may not be readily available for release.
Global diesel and jet fuel inventories are near the bottom of their five-year range, while China is estimated to hold the largest reserve cushion of around 1.7 billion barrels.
- Who
- Saudi Aramco, the International Energy Agency, the United States, China, and global oil analysts and companies such as Morgan Stanley, Rapidan Energy, and Energy Aspects.
- What
- Global emergency oil stocks could come under severe pressure within six months if the US-Iran war continues with a supply gap of about 5 million barrels per day.
- Where
- The Middle East and the Strait of Hormuz, the United States, China, Kazakhstan, and global oil markets.
- When
- The disruption analysis follows months of war, with Ukrainian drone attacks hitting the Caspian Pipeline Consortium in July and an IEA emergency release agreed in March.
- Why
- War-related Gulf supply disruptions and refinery damage are draining usable emergency reserves faster than headline inventory figures suggest.
Producer Assessment
Analyst Assessment
Scale of the supply disruption
Producer Assessment
Saudi Aramco estimates Gulf disruptions have removed about 11 million barrels per day from supply.
Analyst Assessment
Most analysts put the actual gap between supply and demand at around 5 million barrels per day, partly thanks to lower oil demand in China.
Usable emergency stockpile
Producer Assessment
Combined IEA stockpiles of around 1.5 billion barrels look comfortable and would theoretically cover about 300 days of lost supply.
Analyst Assessment
Only about 900 million barrels are government-controlled and accessible, giving roughly six months of cover once commercial inventories are excluded.
China's reserve cushion
Producer Assessment
Energy Aspects estimates China held nearly 1.7 billion barrels of crude in July, enough to cover almost a year of its Hormuz imports.
Analyst Assessment
Other estimates put China's holdings closer to 1 billion barrels, a smaller but still substantial buffer.
Key facts
- Estimated supply gap
- About 5 million barrels per day (most analysts); Aramco estimates 11 million bpd removed
- Lost supply since war start
- About 2.6 billion barrels (Saudi Aramco estimate)
- IEA emergency release
- 400 million barrels agreed by member countries in March
- Government-controlled IEA stocks
- About 900 million barrels (of 1.5 billion total)
- Emergency stock coverage
- About 180 days, or roughly six months, at a 5 million bpd gap
- US Strategic Petroleum Reserve
- Lowest level in more than four decades; ~quarter may be unavailable (Rapidan Energy)
- Diesel and jet fuel inventories
- Near the bottom of their five-year range (Morgan Stanley)
- China's estimated reserves
- Near 1.7 billion barrels (Energy Aspects); other estimates closer to 1 billion
Sources
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