Worldwide oil inventories could sink to record lows

• Oil stores could fall to 7.6bn barrels
• Prices rising again
• Global demand set to reduce

Global visible oil stores are set to drop to record lows even if traffic in the Strait of Hormuz restarts by the end of April, analysts have warned.

Inventories could plunge to 7.6 billion barrels, according to US investment bank Goldman Sachs, even if diplomatic breakthroughs or an end to the Iran war allow ships to pass through the waterway. Researchers said even this was an “optimistic scenario”.

Previous lows in late 2024 to early 2025 stood at around 7.65 billion barrels.

Inventories could fall by another 100 million barrels in May and again in June if flows through the strait do not restart.

Visible stocks are the oil in audited tanks and tracked tankers.

Before the conflict, which has been called the largest shock to the market in history by the International Energy Agency (IEA) chief Fatih Birol, around a fifth of global oil and gas passed through the Strait of Hormuz.

Oil flows through the strait remain at a “near standstill” of just 2 million barrels per day or approximately 10 percent of its normal capacity.

A fall in reserves would deplete an important cushion that is helping to support oil prices.

Brent crude prices were $105.42 a barrel at 06:06 GMT on Friday, down from peaks of nearly $120 in March but above the approximately $70 they traded at before the conflict broke out at the end of February.

Prices rose again this week when peace talks between the US and Iran stalled after the two countries failed to participate in a second round of discussions. The US Navy has maintained a blockade on Iranian vessels, while Iran has reportedly seized tankers in retaliation. 

Analysts at investment bank Citi also forecast a fall in petroleum stock volumes in a research note, as reported by Reuters.

“We expect to see crude and product inventories globally reach their lowest levels in eight years by the end of June, even if the conflict ended this week,” Citi said.

The bank estimates that around 900 million barrels of stockpiles will have been lost even if the conflict ended imminently.

Countries have already drawn down between 470 million and 500 million barrels from their supplies, according to Goldman and Citi.

This includes a 400 million barrel release in March 2026 by the IEA member countries.

Prices are also being kept lower by a drop in demand, experts have said.

The world was using almost 105 million barrels of oil a day before the conflict, according to the IEA. 

The organisation forecasts that oil demand worldwide will decline by 80,000 barrels a day this year – in what would be the first annual drop since the Covid-19 pandemic – and will fall by 1.5 million barrels a day in the second quarter. 

It is a reversal from previous expectations that demand would grow.

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Researchers at S&P Global forecast on Thursday that demand will drop by a far steeper 700,000 barrels a day in 2026, Reuters reported.

Ole Hansen, head of commodity strategy at Saxo Bank, said “demand destruction and stock drawdowns” are masking the shock.

“The market is pricing temporary disruption and weak demand, likely underestimating how tight things become once demand stabilises.”

Countries are mandating work from home, advising the public to use less energy on air conditioning and reducing highway speed limits to preserve fossil fuel use, according to a tracker from the IEA.