"Oil Prices Poised to Rise Further" Global Crude Oil Inventories Drop by 200 Million Barrels at Record Pace

In the aftermath of the Middle East war, global crude oil inventories are reportedly decreasing at a record pace. There are also warnings that international oil prices could rise further, as the supply disruption is progressing more rapidly than the decline in demand.

Associated Press Yonhap News

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According to the Financial Times (FT) on May 5 (local time), citing estimates from S&P Global Energy, global crude oil inventories fell by approximately 200 million barrels in April. This amounts to a daily average decrease of 6.6 million barrels. Although the surge in oil prices led to a demand drop of 5 million barrels per day, the reduction in supply exceeded this, resulting in a pronounced overall decline in inventories.

Jim Burkhard, Head of S&P Crude Oil Research, stated, "Since the outbreak of the Iran war, a total of 1 billion barrels of oil have disappeared from the market," adding, "Oil prices are highly likely to rise further going forward."

In fact, global inventories are rapidly depleting. Global investment bank Goldman Sachs recently analyzed that current crude oil inventories are approaching their lowest level in eight years. Refined product inventories-including gasoline, diesel, and jet fuel-are also down to only 45 days' worth globally. The declines have been particularly notable in Asia and Africa.

Jet fuel inventories in Northern Europe have fallen to a six-year low, and there are concerns that U.S. gasoline inventories could approach their lowest level ever this summer. Morgan Stanley projected that U.S. inventories could drop below 200 million barrels by the end of August.

Mike Wirth, Chief Executive Officer of Chevron, attended the Global Conference hosted by the Milken Institute on this day and stated, "A real (crude oil) supply shortage is starting to emerge," noting that the so-called "shadow fleet," oil tankers, and even countries’ strategic reserves are being depleted. He further warned of an economic slowdown, saying, "Demand will have to adjust to meet supply."

He particularly forecast that Asian countries would be the first to feel the shock, given their high dependence on Persian Gulf oil. Subsequently, Europe will be affected, and even the United States-though a net crude oil exporter-will eventually feel the impact of supply constraints.

International oil prices remain relatively stable, as the United States and Iran have indicated that a ceasefire is still in effect despite ongoing clashes. U.S. President Donald Trump announced that significant progress had been made in negotiations with Iran, and that the "Project Freedom," which was assisting merchant vessels stranded in the Strait of Hormuz, would be temporarily suspended.

According to CNBC, the June Brent crude oil futures, a benchmark for international oil prices, were trading at $108 per barrel as of 1:58 p.m. on May 6 (Korean time), down 1.7% from the previous session. On May 4, it reached $114 per barrel.

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