US-Iran War Raises Concerns Over Oil Supply Disruptions

The ongoing US-Iran war has caused concerns about oil supply disruptions, and experts are questioning whether global stocks can weather another six months of conflict. According to calculations by Saudi Aramco, the world has lost 2.6 billion barrels of oil since the start of the war, making it the largest supply disruption on record, aside from the 1979 Iranian revolution. This amounts to a massive 25 days of global consumption based on pre-war demand of 103 million barrels per day.

However, China has cut its demand in recent months, reducing global oil consumption. Analysts estimate that the daily supply gap is around 5 million bpd, although Saudi Aramco believes it's closer to 11 million barrels lost from the Gulf daily. The International Energy Agency (IEA) estimates that global stocks can cover this gap for 300 days.

But there are concerns about releasing commercial stocks, which make up a significant portion of total IEA stocks. These stocks cannot be released on demand, leaving only government-held stocks as an option. Even then, the US Strategic Petroleum Reserve (SPR) is running low, with stocks at their lowest level since January 1983.

Experts warn that global oil inventories are dwindling, reducing the buffer against supply shocks and making the market vulnerable to price increases. The depletion of diesel and jet fuel stocks has been particularly severe, with some analysts estimating that China's reserves could cover its pre-war imports for almost a year.