Global oil stocks hit critical levels as Mideast war drags

Global oil inventories have reached critical levels in many parts of the world after absorbing this year's supply shock, Energy Intelligence reported on October 29. Crude and fuel prices have been rising in recent weeks even as global stock draws slowed. The publication called this a red flag, because it suggests high prices are now being used to cut consumption and bring a stressed market back into balance.energyintel.com

The pressure is building as the Mideast war enters its ninth month. Energy Intelligence said that the longer the conflict lasts, the more countries and companies will want to hold on to their stocks, even though more oil has recently found ways out of the region than at the start of the crisis. Fears that Washington could step up attacks on Iran after the November 3 US midterm elections have also pushed prices higher, and Iran has threatened retaliation in the Gulf, according to the report.energyintel.com

Gulf exports are holding up, for now

The 14 million barrels per day cited by Vitol CEO Russell Hardy measures oil leaving the Middle East, not oil lost from it. Speaking at the Energy Intelligence Forum in London on October 6, Hardy said about 12 million bpd of crude and 2 million bpd of refined products had left the region over the previous seven to ten days, Reuters reported. He warned that without a steady 10 million to 14 million bpd leaving on ships, energy markets will destabilize going into winter because Western inventories are low. He added that a shutdown of those volumes could push benchmark crude toward $200 a barrel. Hardy described this year's disruptions as starting with crude, then spreading to refined products, and now becoming a shipping crisis with "pretty parabolic pricing" on freight, BOE Report noted.reuters.com+1

Those flows depend on long detour routes and very high shipping rates. Three tankers were struck in Hormuz between October 2 and 5, Energy Intelligence reported.energyintel.com

Buffers running down

The International Energy Agency said global observed inventories were 509 million barrels below pre-war levels at the end of September, with on-land stocks at their lowest since at least 2016. It warned that markets "may experience more turmoil in the months ahead" without a resolution to the conflict, according to its October report. Saudi Aramco CEO Amin Nasser said "less than 6 billion barrels of commercial inventories remain today, with the vast majority not practically available," Reuters reported.iea.org+1

In the United States, crude inventories fell by 1.9 million barrels in the week ended October 23, against expectations of a small build, and Gulf Coast stocks dropped to their lowest since December 2024, the EIA data showed, per Reuters. The IMF has warned that reserves are "rapidly reaching stress levels that could lead to nonlinear price adjustments," ICIS reported.rmb.reuters.com+1