Luojiashan tanker sits anchored in Muscat, as Iran vows to close the Strait of Hormuz, amid the U.S.-Israeli conflict with Iran, in Muscat, Oman, March 7, 2026. REUTERS\/Benoit Tessier<\/p>\n
Oil Shock Far From Over: Energy Giants Warn Global Fuel Supplies May Stay Tight for Months After Iran Deal<\/p>\n
LONDON, May 6 (Reuters)\u00a0\u2013\u00a0Oil\u00a0supplies are set to tighten further in coming weeks even if the U.S. and Iran agree on a peace deal to end their<\/p>\n
because it will take weeks for\u00a0oil\u00a0shipments to resume from the Middle East Gulf and reach refiners worldwide \u2013 so\u00a0oil\u00a0companies will continue to deplete storage tanks to meet peak summer demand.<\/p>\n
The world has used temporary buffers \u2013 commercial stockpiles,\u00a0oil\u00a0in transit or held in storage at sea and emergency reserves \u2013 to offset the shock from the war in the Middle East. The full impact of the disruption to\u00a0oil\u00a0supplies has yet to wash through markets and the global economy because it will be many months before Middle East production and exports return to pre-war levels, said executives from major energy companies, investment banks and market analysts.<\/p>\n
The rapid depletion of commercial stockpiles and emergency reserves has come at a time when stockpiles typically build as refiners and retailers prepare for peak demand during the Northern Hemisphere summer. The global energy system will soon enter peak demand in a weakened position to deal with the spike in consumption from summer driving, aviation, farming and freight.<\/p>\n
That would stress the global energy system and extend the time it would take for\u00a0oil\u00a0producers and refiners to relieve\u00a0supply\u00a0shortages and for high fuel prices to return to pre-war levels, according to executives and analysts.<\/p>\n
\u201cEven if the conflict, and I hope so, will end in the month of May, we would exit the conflict with clearly some very low inventories,\u201d TotalEnergies\u00a0TTEF.PA\u00a0CEO Patrick Pouyanne said last week,\u00a0estimating global hydrocarbon stock draws\u00a0of 10 million to 13 million barrels per day have resulted in at least 500 million barrels already consumed\u00a0from stockpiles.<\/p>\n
For comparison, the U.S. has about 460 million barrels in crude inventories.<\/p>\n
Equinor\u00a0CEO Anders Opedal said on Wednesday that it\u00a0would take at least six months\u00a0for the market to get back to normal, even with peace in the Middle East.<\/p>\n
\u2018UNPRECEDENTED DISRUPTION\u2019<\/p>\n
U.S. President Donald Trump has said that prices would drop quickly once the conflict is over. Progress on talks between the U.S. and Iran on a framework peace deal led to\u00a0a fall of 7.8% on benchmark Brent crude futures on Wednesday\u00a0to $101.27 a barrel.<\/p>\n
While\u00a0oil\u00a0futures would likely fall quickly in the event of a deal, it would be some time before physical crude and gasoline prices fall to pre-war levels as supplies recover from one of the biggest\u00a0supply\u00a0disruptions in history. Analysts have steadily raised their forecasts this year, and a Reuters poll last week\u00a0had them pegging\u00a0Brent futures to average $86.38 a barrel this year, up from around $62 a barrel in January.<\/p>\n
Demand is likely to run higher once the conflict is over as countries and companies worldwide look to rebuild stockpiles and restart shut-in production facilities \u2013 and some countries that have suffered shortages start building new stockpiles.<\/p>\n
Australia, which imports roughly 80% of its fuel and has experienced shortages since the start of the conflict,\u00a0announced plans on Wednesday\u00a0to spend $7.22 billion to build up fuel reserves.<\/p>\n
The European Commission said last month\u00a0it would consider\u00a0reviewing the EU\u2019s requirement for countries to hold at least 90 days of\u00a0oil\u00a0stocks, to include a specific jet fuel requirement.<\/p>\n
Since late February, when the war began, stockpiles have fallen quickly. Global inventories are expected to drop to around 98 days of demand by the end of May from 101 days currently and\u00a0from 105 days at the end of February, Goldman Sachs said this week, warning that refined product buffers\u00a0are \u201capproaching very low levels fast.\u201d<\/p>\n
So far the world has lost around 600 million barrels of\u00a0oil\u00a0supply, according to Rystad Energy. By the time\u00a0supply\u00a0returns to normal, assuming normalization of shipping starts at the end of May, the world will have lost 1.2 billion to 2.0 billion barrels of\u00a0supply, equivalent to between 16-27% of pre-war global inventories, said Claudio Galimberti, chief economist at Rystad Energy.<\/p>\n
Global gas supplies have also taken a big hit due to the closure of Qatar\u2019s liquefied natural gas (LNG) production and damage sustained during the war. The loss of\u00a0supply\u00a0will total between 30 million tonnes and 50 million tonnes of LNG, equivalent to between 7%-11% of annual global\u00a0supply, Galimberti said.<\/p>\n
\u201cIt\u2019s obvious to most that if you look at the unprecedented disruption in the world\u00a0supply\u00a0of\u00a0oil\u00a0and natural gas, the market hasn\u2019t seen the full impact of that yet,\u201d Exxon Mobil\u2019s\u00a0CEO Darren Woods\u00a0said in an analyst call last week.<\/p>\n
U.S. gasoline inventorieswould\u00a0fall to around 198 million barrels by late summer \u2013 the lowest level for that time of year in modern records, Morgan Stanley predicted. U.S. gasoline stocks were just under 220 million barrels on May 1, the lowest for this time of year since 2014, government data showed.\u00a0Rising exports to meet demand from countries experiencing shortages have accelerated the drawdown.<\/p>\n
Europe\u00a0could face jet fuel shortages\u00a0as early as June if disrupted Middle East supplies are not fully replaced, the International Energy Agency has warned.<\/p>\n
Ireland had just 10 days of stock cover for jet fuel supplies, according to a note from Goldman Sachs published last week.<\/p>\n
In Asia, crude imports fell 30% in April from a year earlier to the lowest since 2015, according to Kpler, underscoring the extent of\u00a0supply\u00a0disruption in the world\u2019s largest\u00a0oil-consuming region.<\/p>\n
Onshore fuel\u00a0oil\u00a0inventories in Singapore, a major bunker hub,\u00a0fell to a near one-year low\u00a0in the week to April 29, as both imports and exports declined, data showed last week.<\/p>\n
Even if\u00a0supply\u00a0routes reopen, the global energy system will not recover quickly, executives and analysts said.<\/p>\n
Woods said it would take one to two months for\u00a0oil\u00a0flows to normalize after the Strait of Hormuz reopens, as shipping backlogs clear. It takes on average 30 days for ships to move from the Middle East to the European Union, and 40 days to move from there to the U.S.<\/p>\n
Meanwhile, the disruption to refining capacity in the Middle East will hamper the recovery in\u00a0supply, said Willie Walsh, the head of the International Air ?Transport Association, with nearly two million bpd of refining capacity offline in the region. Fuel from the Middle East is key to meeting demand in Africa, Asia, and Europe.<\/p>\n