Global Oil Stockpiles Are Draining at Record Speed—Here’s What Happens Next

By late May, the situation had intensified further. Goldman Sachs reported that visible global inventories shrank by a record 8.7 million barrels per day in May alone, nearly double the average draw rate since the disruption began . The U.S. Energy Information Administration (EIA) projects that global oil inventories will fall by an average of 8.5 million barrels per day throughout the second quarter of 2026 .

What’s Causing the Drain?

The primary driver is a major physical supply shutdown centered on the Strait of Hormuz, the narrow chokepoint through which roughly a fifth of the world’s oil supply normally passes. The ongoing Middle East war has effectively closed the strait and forced widespread production shut-ins across the region . The disruption has not only removed immediate barrels from the market but has also broken the logistical chain that moves crude from producers to refiners, with the Goldman analysts noting that about two-thirds of May’s inventory draw came from a drop in “oil on water” as export declines outpaced weaker imports .

The IEA’s Critical Warning for Summer

Toril Bosoni, head of the IEA’s Oil Industry and Markets Division, warned in early June 2026 that global inventories could reach “critical levels or historical low levels just ahead of the peak summer demand” period—typically July and August, when Northern Hemisphere driving and air travel surge . IEA Executive Director Fatih Birol separately cautioned that markets could enter a volatile “red zone” during those same months if stock draws continue unchecked .

The risk is not just about high crude prices. J.P. Morgan forecasted that commercial oil inventories in developed countries could approach “operational stress levels” by early June, a threshold where normal market functions—from blending to logistics—begin to break down . Saudi Aramco added that global stocks of gasoline and jet fuel could reach “critically low levels” ahead of the summer .

China’s Strategic Reserve: An Evidence Gap

Despite its importance as the world’s largest crude importer, available public reports provide no clear picture of how China’s strategic petroleum reserve is being affected by the current crisis. The sources consulted for this analysis do not contain specific details on Chinese reserve levels, drawdown rates, or buffer capacity under current conditions.

What Happens to Prices—Even Under Optimistic Scenarios?

Analysts are clear that there is no quick price relief ahead. The EIA’s baseline—which already assumes the Strait of Hormuz eventually reopens—forecasts Brent crude averaging $91 per barrel in the second quarter of 2026, with a persistent risk premium on top . In a delayed-reopening scenario published in its May 2026 Short-Term Energy Outlook, the EIA expects Brent near $106 per barrel because the large inventory overhang will limit any swift downward pressure on prices even after flows partially resume .

Even once oil starts moving through the strait again, the EIA warns that production recovery will take “weeks to months” . The IEA’s own analysis notes that under the most optimistic timeline—where flows are reestablished and global production eventually overtakes consumption—the return to normal inventory levels and more moderate prices is a late-2026 story at best . In the meantime, Goldman Sachs and Morgan Stanley have warned that the market is vulnerable to “price spikes, panic buying, and non-linear market moves,” particularly if the Strait of Hormuz remains effectively closed into mid-summer .

The IEA and its member governments have already coordinated the largest-ever collective release from strategic reserves—a 400-million-barrel pledge announced in March, of which about 164 million barrels had been deployed by early May . Yet as Bosoni noted, even with that historic intervention, “rapidly shrinking buffers amid continued disruptions may herald future price spikes ahead” .