Oil Stocks Face Crucial Test as US-Iran War Enters Sixth Month
The ongoing US-Iran war has raised concerns about global oil stocks' ability to withstand another six months of supply disruptions. The world has lost an estimated 2.6 billion barrels of oil since the start of the conflict, with a daily supply gap of around 5 million barrels per day (bpd). Saudi Aramco's head believes this is the largest supply disruption ever in cumulative terms, apart from the 1979 Iranian revolution.
The International Energy Agency (IEA) has announced a release of 400 million barrels from emergency reserves, but these stocks are limited. The IEA estimates that government-held stocks can cover the current supply gap for 180 days, while commercial stocks are not readily available for release.
China's oil reserves are estimated to be around 1.7 billion barrels, which could cover its pre-war imports through the Strait of Hormuz for almost a year. However, estimates vary widely, and it is unclear how much fuel and petrochemicals are held in inventories.