Oil inventories headed toward multi-decade lows, US EIA warns
MONTREAL (Oil Monster): Oil inventories across the world’s largest economies are on course to fall to their lowest levels since at least 2003 as lost output from the Iran war forces an unprecedented drawdown in global stockpiles, the U.S. Energy Information Administration said Tuesday.
OECD oil stocks seen falling to multi-decade lows
Total oil inventories in member countries of the Organization for Economic Cooperation and Development are projected to fall to just under 2.3 billion barrels by December. The EIA said that would mark the lowest OECD stockpile level since it began keeping records in 2003.
Hormuz disruption remains central to the outlook
The agency’s forecast assumes marine traffic through the Strait of Hormuz does not return to pre-conflict levels until early 2027. That prolonged disruption is forcing inventories lower as markets attempt to offset 11 million barrels per day of lost Middle Eastern output.
Inventory drawdown points to higher oil prices
The EIA said the rapid inventory decline is laying the groundwork for a sharp increase in oil prices in the months ahead. Recent reports that the United States and Iran were nearing a deal to reopen the Strait of Hormuz had weighed on prices, but the agency said no final agreement has yet been reached.
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EIA sees Brent averaging $105 in June and July
The EIA expects Brent crude to average around $105 per barrel in the June and July spot market, well above the $91.60 per barrel level in futures trading on Tuesday. The agency said prices are likely to remain elevated until oil flows normalize and inventories are rebuilt.
High prices and shortages expected to curb demand
According to the EIA, high oil prices, reduced fuel availability, and government-led conservation measures will cause global oil demand to contract this year for the first time since the pandemic slump of 2020. The agency now forecasts a decline in demand of 1.1 million barrels per day, reversing its earlier projection for growth of 200,000 barrels per day.
Courtesy: www.reuters.com
People Also Ask
How low does the EIA expect OECD oil inventories to fall in 2026?
The EIA expects OECD oil inventories to fall to just under 2.3 billion barrels by December 2026.
Why are global oil inventories falling so quickly?
Inventories are falling rapidly because markets are drawing down stocks to offset 11 million barrels per day of lost Middle Eastern output.
What does the EIA assume about Strait of Hormuz shipping?
The EIA assumes marine traffic through the Strait of Hormuz will not return to pre-conflict levels until early 2027.
What Brent crude price does the EIA forecast for June and July?
The agency expects Brent crude to average around $105 per barrel in the June and July spot market.
Does the EIA expect global oil demand to rise or fall this year?
The EIA expects global oil demand to fall by 1.1 million barrels per day this year.