Global Oil Stockpiles Face Stress Test as US-Iran Conflict Drags On
Aramco says the world has lost 2.6 billion barrels since the war began. Government-held emergency stocks could cover the gap for only 180 days.
As the US-Iran war enters its sixth month, oil traders and policymakers are asking whether global stockpiles can cushion what could become the largest supply disruption on record. The answer depends not just on how much oil is stored, but on how much of it can actually be released.
The head of Saudi Aramco estimates the world has lost 2.6 billion barrels since the conflict began — the biggest cumulative supply loss since the 1979 Iranian revolution. That equals roughly 25 days of pre-war global consumption of 103 million barrels per day, though recent demand cuts in China have reduced daily usage.
Most analysts put the current supply gap at about 5 million barrels per day, even though Aramco says Gulf supply losses amount to 11 million barrels daily. The gap may have widened in July after Ukrainian drone strikes shut Kazakhstan's CPC pipeline, which carries 1.8 million barrels per day.
The International Energy Agency (IEA), created after the 1973 Arab oil embargo, announced a 400-million-barrel release from emergency reserves in March. Its total stocks — government-held plus commercial — stand at 1.5 billion barrels, enough to cover the estimated gap for 300 days. But the IEA cannot compel the release of commercial stocks held by refiners for operational reasons.
That leaves only 0.9 billion barrels in government hands — enough for 180 days at the current gap. The IEA says it is ready to release more if the crisis worsens.
One-third of those government stocks sit in the US Strategic Petroleum Reserve (SPR), which has fallen to its lowest level since January 1983. The US Government Accountability Office warned in May that the SPR's infrastructure is deteriorating, with a quarter of reserves no longer accessible. Analysts at Rapidan Energy estimate that means over 100 million barrels are effectively unreleasable, leaving perhaps 200 million accessible barrels — just 40 days of cover.
A fresh IEA release looks unlikely, as many countries have limited stocks left, according to Christian Egeland of Energy Aspects. The depletion of inventories has reduced the buffer against supply shocks, leaving the market vulnerable to sharp price rises, said Hamad Hussain of Capital Economics.
Diesel and jet fuel are the biggest concern. Global stocks of both are at the bottom of their five-year range, according to Morgan Stanley. Damage to Middle Eastern and Russian refineries has hit these fuels particularly hard, said Survo Sarkar of DBS Bank.
Total global oil stocks — including commercial inventories, the SPR, Chinese reserves and oil on water — look fairly comfortable, the IEA says. But much of that is not a real buffer: oil on water is often already sold and in transit.
China does not disclose its reserves. Energy Aspects estimates Beijing held nearly 1.7 billion barrels of crude in July, though other consultancies put the figure between 1.0 and 1.7 billion. At the higher estimate, China could cover its pre-war Hormuz imports of 5.5 million barrels per day for almost a year — one of the most comfortable positions among major economies, alongside Japan.