OECD inventories fell by 163 million barrels to their lowest level since 1990, delaying Iran’s leverage over Hormuz despite recovering prices.
OECD oil inventories dropped to their lowest level since December 1990, declining by 163 million barrels between March and May. The drawdown occurs as prices stabilize and Hormuz tanker traffic recovers, but restocking is expected to take months or years.
Analysts at Macquarie and Citigroup warn Brent could fall toward $60 in the near term, as slower restocking dynamics weaken Iran’s negotiating leverage over the Strait of Hormuz. China’s cautious approach to replenishing reserves further complicates the outlook, keeping global supply elevated despite low inventory levels.
Strategic reserve managers in Western nations are unlikely to begin large-scale buying until the fourth quarter, prolonging the market’s vulnerability to price swings. The extended timeline for rebuilding buffers contrasts with the 60-day window set by the current US-Iran memorandum of understanding.