Goldman Sachs says the world has 45 days of refined fuel left
Global crude stockpiles fell nearly 200m barrels in April alone, S&P Global Energy estimated — roughly 6.6m barrels a day, the sharpest drawdown outside Covid-19.
The Financial Times reported the oil market has now lost a billion barrels of supply since the Iran war began in late February, and according to S&P's Jim Burkhard, demand is falling fast but remains “outstripped by the loss of supply.”
Higher crude prices are still to come, Burkhard told the FT, warning that “an inevitable market reckoning is coming.”
Goldman Sachs on Monday said global oil stocks are approaching their lowest level in eight years, Reuters reported, with total reserves at 101 days of demand and potentially falling to 98 days by end of May.
According to the FT, commercial refined product buffers have drawn from 50 days before the US-Israeli war on Iran to 45 days now — with Goldman warning that easily accessible reserves are fast approaching critically low levels, driven largely by steep declines across Asia and Africa.
The Associated Press reported Brent crude fell 4 percent to US$109.87 a barrel Tuesday after briefly cresting US$115 on Monday still well above the roughly US$70 price before the Iran war.
The retreat came as US military leaders told reporters that the ceasefire with Iran remains in effect despite Iranian-blamed attacks against the UAE the previous day, and as the US military continued efforts to force open a shipping corridor through the Strait of Hormuz.
US equities rallied on the oil pullback, with the S&P 500 climbing 0.8 percent to a record high, the Dow adding 356 points, and the Nasdaq setting its own record.
IMF managing director Kristalina Georgieva told a Milken Institute conference Monday that the fund's baseline forecast was “no longer viable,” Reuters reported.
That forecast had projected modest growth of 3.1 percent and inflation of 4.4 percent, premised on a short-lived conflict.
The adverse scenario is now in effect, Georgieva said, forecasting global growth slowing to 2.5 percent in 2026 and headline inflation at 5.4 percent.
She warned the baseline was fading quickly, saying it was “further and further behind in the rear-view mirror.”
Under the IMF's most severe scenario — war extending into 2027 and oil near US$125 a barrel — she projected growth of just 2 percent and inflation of 5.8 percent, with price expectations beginning to “de-anchor.”
Chevron chairman and CEO Mike Wirth, speaking on the same panel, told Reuters that physical shortages would begin appearing worldwide because of the strait's closure, with Asian economies the first to contract as demand adjusts to constrained supply.
Oil prices jumped about 6 percent Monday after Iran struck several ships in the strait and set a UAE oil port ablaze — the largest escalation since a ceasefire four weeks ago.
According to the FT, Benchmark Brent crude retreated about 4 percent to US$110 a barrel on Tuesday as the ceasefire held.
Traders warn prices could surge much higher once stocks dip below critical thresholds, with some telling the same outlet that a “tipping point” is weeks away.
In the US, gasoline stocks are on course for their lowest-ever summer level, Goldman Sachs said.
According to Reuters, Morgan Stanley estimated that despite pump prices nearing US$4.50 a gallon, American drivers have yet to significantly cut consumption, and US inventories could fall below 200m barrels by end of August — roughly one week of demand.
Burkhard told the FT that the US has not yet felt the full force of the crisis, with crude stockpiles still above last year's levels — but warned that a sharp drop in US stocks could trigger broader alarm.
“The worst of the crisis is ahead of us,” he said.
On the broader economic fallout, Georgieva told Reuters the IMF was tracking the conflict's creeping impact on supply chains, with fertilizer prices already up 30 to 40 percent — enough to push food prices 3 to 6 percent higher.
She warned policymakers against propping up consumer demand through subsidies while supply continues to shrink.
“Don't throw gasoline on fire,” she said. “Everybody in this room knows that if your supply shrinks, your demand has to follow.”
