Ceasefire or Not, Oil Stocks Headed for Historic Low
Researchers at Citi have warned that even if a ceasefire agreement between the United States and Iran is extended, global oil stocks could still plummet by approximately 900 million barrels by the end of June. This prediction is based on the bank's analysis of current crude and product inventories, which are expected to reach their lowest levels in eight years.
The decline would include a drawdown of 500 million barrels that has already occurred, as well as an additional 400 million barrels due to ramp-up delays, logistical bottlenecks, and conflict-related damage. Citi noted that if the conflict were to end this week, crude and product inventories globally would still be at their lowest levels in eight years by the end of June.
Additionally, if Strait of Hormuz disruptions persist for an additional month at current levels, total inventory losses could rise to around 1.3 billion barrels, with Brent crude prices potentially reaching $110, $90, and $80 a barrel in the second, third, and fourth quarters of 2026, respectively.
On the other hand, if disruptions continue for two months, losses could reach about 1.7 billion barrels, pushing inventories to their lowest levels on record based on around 25 years of data. In this scenario, Brent crude prices would likely reach $130 a barrel by the second quarter.