Global Oil Market Narrowly Avoids Supply Shortages Amid U.S.-Iran Conflict

The global oil market has narrowly avoided severe supply shortages despite disruptions to major export routes. The crisis, caused by the U.S.-Iran conflict, was cushioned by emergency stock releases and inventory drawdowns.

However, this buffer is now dwindling. The U.S. Strategic Petroleum Reserve has dropped to 311.4 million barrels, its lowest level since March 1983.

The International Energy Agency's head, Fatih Birol, notes that IEA countries still hold a substantial volume of emergency stocks in reserve, including over one billion barrels of government-controlled stocks.

But the Strait of Hormuz, which normally handles about 20 million barrels of oil and petroleum products daily, has slowed to a trickle. The Bab el-Mandeb route, which carries Saudi oil, is also under pressure.