Goldman Sachs says crude market tightening as inventories fall at record pace

Global oil inventories are declining at an accelerating pace as the US-Iran standoff over the Strait of Hormuz grinds on without resolution, Goldman Sachs The Goldman Sachs Group, Inc. ↗ 4.67% warned in a research note published Thursday. The bank said visible oil inventories have fallen by an average of 6.2 million barrels per day since the US announced its blockade on July 13, with offshore inventories in the Persian Gulf and landed inventories in China accounting for the bulk of the drawdown at 3.4 million and 1.8 million barrels per day respectively.news.futunn

Spot Premiums Signal Physical Tightness

Goldman Sachs noted that spot crude premiums in major global regions have reached historical highs, exceeding levels seen in 90% of past periods — a clear signal of strong immediate physical demand. Brent crude prices pushed close to $90 per barrel last week amid limited progress in US-Iran negotiations. Data from Kpler shows Persian Gulf oil flows remain at only 36% of pre-war levels, while Middle East production outages, though declining from a peak of 10.4 million barrels per day in May, still stood at 5.6 million barrels per day in July.news.futunn

Demand has recovered from its May lows. Goldman Sachs' real-time indicators show global trackable oil demand has rebounded to just 1% below year-ago levels, with roughly two-thirds of that recovery driven by China. The International Energy Agency reported that global oil demand increased by 3.1 million barrels per day from May to June, led by diesel and gasoline consumption.news.futunn

Warnings of $100 Oil

Mirae Asset analyst Mohammed Imran warned that without a diplomatic breakthrough between Washington and Tehran, Dated Brent could reach $100 per barrel by mid-September, with Brent futures climbing above $90. The IEA's latest monthly report showed global observed oil inventories fell by 69 million barrels in July, with monitored stocks down an estimated 410 million barrels since the conflict began — equivalent to roughly 2.7 million barrels per day on average.business-standard

US inventory buffers also remain thin. As of August 7, crude oil inventories stood 1.8% below the seasonal five-year average, gasoline inventories were 5.8% below average, and distillate inventories were 11.9% below average.business-standard

China's Restraining Role

Goldman Sachs noted that China could curb upward oil price pressure by reducing imports, observing that every increase of 1 million barrels per day in Chinese crude imports has corresponded to an average rise of $4 to $5 in the Brent DFL spread since mid-April. With new energy vehicle sales penetration in China reaching 62.3% in July, the bank projects a permanent loss of approximately 500,000 barrels per day in Chinese oil demand by 2027.news.futunn

Despite the partial demand offset from electrification, the combination of constrained supply and depleting inventories leaves the market vulnerable to further price spikes so long as the Strait of Hormuz remains largely closed to tanker traffic.