Global oil inventories risk falling to critically low levels ahead of the summer consumption spike if current stock draws persist, the International Energy Agency's oil industry and markets division head said at a London conference.
Toril Bosoni warned that stock withdrawals have continued into the summer and that, if the trend remains unchanged, inventories could reach historical lows immediately prior to the period when fuel demand normally surges. The Northern Hemisphere summer typically brings higher fuel consumption as people travel by car and by air for holidays, concentrating demand in a relatively short window.
Speaking at the S&P Global Energy Middle East Petroleum and Gas Conference in London, Bosoni also addressed the possible timeline for reopening the Strait of Hormuz. She said that, in a best-case scenario where an agreement were reached today, it could take six to eight months to reopen the shipping lane.
The IEA-coordinated emergency stock release that took place in March remains partly unhitched from the market, according to Bosoni. She noted that roughly half of the initial 400-million-barrel coordinated release has not yet reached consumers. While another coordinated release remains a theoretical option, she said it is not under active discussion at present.
Bosoni cautioned that emergency stock releases serve only as a temporary stop-gap. Given the magnitude of the supply losses the market faces, she said the necessary adjustments would have to come from the demand side rather than relying on further emergency reserves.
Context and implications
The IEA official's remarks underscore a narrow margin between current inventories and the seasonal peak in fuel use. The persistence of stock draws into the summer raises the risk that markets will enter the busiest travel season with less cushion than is typical, a dynamic that could influence fuel availability and market sentiment.
What remains uncertain
- Whether stock draws will continue at the current pace into the full summer demand period.
- The timetable for any diplomatic or operational resolution that would allow the Strait of Hormuz to reopen, given the IEA's six-to-eight-month best-case estimate.
- The extent to which remaining coordinated emergency releases can be delivered to the market and whether further releases will be considered.