According to S&P Global Energy, global oil reserves fell by a record 200 million barrels in April (nearly 6.6 million barrels per day) due to the blockade of the Strait of Hormuz, through which 20% of the world’s energy transit passes. Demand fell by 5 million b/d due to high prices, but supply collapsed even more – 15 million b/d were lost.
Even if the Strait of Hormuz were reopened tomorrow, it would take at least seven months to restore upstream production (assuming no permanent damage).
Goldman Sachs warns that global oil reserves are at an eight-year low. Fuel (gasoline, diesel, jet fuel) is left for just 45 days of consumption. The shortage is most acute in Asia and Africa.
The US is still holding on thanks to its strategic reserves, but if its stocks fall below a critical level (by the end of August there could be just one week of demand left), panic in the global market is inevitable.
Michael Wirth (Chevron) forecasts that physical oil shortages will begin around the world. Economies will have to slow down. The scale is comparable to the 1970s crisis.
Prices have already reached a four-year high of $126 per barrel. Even after the truce news receded, Brent remains above $100, and analysts expect a new rally.
