Oil Reserves Face Crunch as U.S.-Iran War Drags On

The ongoing U.S.-Iran war has left oil traders and policymakers questioning whether global oil reserves can withstand another six months of disruptions.

Ahead of this year's supply disruption, which is estimated to be 2.6 billion barrels since the start of the conflict, Saudi Aramco believes it is the largest ever apart from the 1979 Iranian revolution.

The International Energy Agency (IEA) announced a release of 400 million barrels from emergency reserves in March but notes that global stocks are sufficient to cover demand for only 300 days. However, not all commercial stocks can be released due to operational reasons, leaving only government-held stocks of 0.9 billion barrels, enough for 180 days.

The IEA's remaining government-held stocks consist of one-third held in the United States, but those in the U.S. Strategic Petroleum Reserve have dropped to their lowest levels since January 1983, with over 100 million barrels becoming impossible to release.