Hormuz blockade drains global oil reserves at record pace; commercial stocks risk critical lows by end of June, analysts warn

Strategic petroleum reserves are draining rapidly as countries release emergency crude to cushion the economic impact of the Iran war, DW reported. The closure of the Strait of Hormuz -- which carried about 20 percent of global oil trade before the conflict -- has, nearly three months in, produced an oil supply shock on a scale unseen in decades, with Asian economies dependent on Middle Eastern energy scrambling for alternatives and introducing measures to curb fuel demand.

The International Energy Agency coordinated a release of about 400 million barrels from industrialised-country stockpiles in March, aimed at stabilising prices and ensuring adequate supply. EU member states contributed roughly 20 percent of that pool -- Germany 19.5 million barrels, France 14.6 million, Spain 11.6 million and Italy 10 million -- and the bloc is required by law to maintain emergency stocks equal to at least 90 days of net imports or 61 days of consumption. The US separately waived sanctions temporarily on Russian crude sitting on stranded tankers to boost global supply.

Before the war, the largest strategic stockpiles globally were held by China, the United States and Japan. US Energy Information Administration data showed China carried nearly 1.4 billion barrels in inventory as of December 2025, including both commercial and government-held reserves. The US maintained around 413 million barrels in its Strategic Petroleum Reserve and a further 411 million barrels of commercial crude inventories; Japan held about 263 million barrels in government-controlled reserves alone. India's strategic reserves stood at around 21 million barrels, providing coverage of roughly 9.5 days of net imports per S&P Global -- or about 74 days when reserves held by state-run oil firms are included.

The IEA said global observed oil inventories fell at a record pace in March and April, dropping by 246 million barrels. Director Fatih Birol warned recently that oil stocks were "not endless" and were falling "very fast" around the world, and stressed that it would take "a lot of time" for production and refining capacity to return to pre-war levels. Goldman Sachs issued a similar warning last week that global stockpiles were being drawn down at record pace this month.

"At the current pace of drawdown, commercial oil stocks could reach critically low levels by the end of June," Neil Shearing, chief economist at Capital Economics, wrote in a May 18 research note. If supply conditions did not improve soon, he warned, "prices could rise sharply." Antoine Halff, non-resident fellow and energy expert at Columbia University's Center on Global Energy Policy, told DW shortages "will not be felt as acutely across all geographies and sectors" if disruption persists -- Asian countries are likely to be the most affected because of heavy reliance on Middle Eastern energy, while air travel and aviation fuel are among the sectors most acutely hit. A surge in oil prices, he added, "will be felt everywhere, including in countries that benefit from ample domestic supply such as the US."

Helima Croft, head of Global Commodity Strategy and MENA Research at RBC Capital Markets, said markets may be underestimating the difficulty of resolution. "The fundamental reality is that expectations for a near-term, full Hormuz recovery rest on unrealistic assumptions about the ease of resolution and the strategic calculations of all parties involved," she wrote. If the current rate of supply loss continues, she estimated, "cumulative crude losses will exceed 1 billion barrels by month-end and approach 1.5 billion barrels if the situation remains unchanged through June," driving oil prices toward 2008 peak levels. "At that stage, demand destruction will likely be what balances the market." Some countries have already moved on demand: shorter workweeks in the Philippines and reduced transport use in Pakistan.

A second coordinated reserve release looks unlikely. French Finance Minister Roland Lescure, who recently hosted G7 counterparts, told the Financial Times the stocks were "finite" and could not be released "without having visibility on the duration and intensity of the conflict at this stage." Halff said that should Hormuz remain blocked for much longer, "there just isn't much governments can do to ensure supply and keep prices in check at the same time. Releasing oil from strategic reserves can help, but only up to a point, as supplies are not limitless." Crude prices remain elevated relative to pre-conflict levels, the article noted, and have been volatile -- falling on hints of a quick resolution and spiking when signs suggest the strait will stay closed.