500 Million Barrels Drawn as Oil Price Supply Shortages Deepen

Oil price supply shortages are deepening as 500 million barrels have already been drawn from global inventories since the war began, with strategic reserves helping offset lost Middle East supply and hold down prices. TotalEnergies chief executive Patrick Pouyanne said the world is drawing 10 to 13 million barrels a day from stockpiles. For refiners and traders, that leaves less room to absorb another disruption.

Pouyanne Sees Very Low Inventories

10 to 13 million barrels daily is the pace Pouyanne described, and he warned that even a conflict ending in May would still leave the market with “clearly some very low inventories.” That is the immediate trade-off for keeping barrels flowing: the cushion is getting thinner while the Middle East disruption persists.

500 million barrels is the draw already reported from global inventories since the start of the war, while Rystad Energy estimated a total supply loss of about 600 million barrels since the start of March. The gap between those figures points to how quickly the system is being drained as the last tankers out of the Persian Gulf reach their destinations.

Rystad Sees Up To 2 Billion

1.2 billion to 2 billion barrels is the range Rystad Energy gave for total supply loss if tanker traffic in the Persian Gulf returned to normal at the end of the current month. Claudio Galimberti said that amount equals 16% to 27% of pre-war supply, a scale that would keep inventories under pressure even if shipping lanes stabilize.

Over 90 days’ worth of demand was sitting in inventories in 2021, but by 2022 that had fallen to below 80 days’ worth of demand. In the worst case described here, global inventories could slide to close to 70 days’ worth of demand, a level reached while refiners would normally be building stocks before the northern hemisphere’s peak driving season, active farming season and peak air travel period.

Asia Faces A Thinner Cushion

The drawdown is already being felt in Asia, and the timing is awkward for a market that usually wants more barrels, not fewer, ahead of summer demand. If tanker traffic stays disrupted into the end of June or beyond, the market would be relying on inventories that are already lower than they were five years earlier, leaving little slack if another supply shock arrives.