The global oil market has lost much of the storage buffer that has traditionally helped absorb supply disruptions, with industry executives warning that readily accessible inventories are now running dangerously low. More than 1 billion barrels have been drawn mainly from onshore commercial stockpiles since the start of this year’s Middle East crisis, while wars in the Middle East and Ukraine have created unprecedented disruption to global oil supplies.
Amin Nasser, chief executive of Saudi Aramco, said at the Energy Intelligence Forum in London that less than 6 billion barrels of commercial oil inventories remained, and that most of that volume was not practically available to the market. “Less than 6 billion barrels of commercial inventories remain today, with the vast majority not practically available, so the system is already straining,” Nasser said.
The depletion has removed what Nasser described as the oil industry’s last major tool for easing pressure on supplies. More than 1 billion barrels have already been released, mainly from onshore commercial inventories, since the Middle East crisis began. The International Energy Agency is preparing to release 100 million barrels of crude and diesel in an effort to alleviate soaring diesel prices, although it remains unclear whether some of that volume will come from stocks included in its record 400 million-barrel release in March that had not yet reached the market.
“It took a lot of negotiations, but it is 100 million,” Nasser said of the IEA decision. “Inventories are reaching a stress level. Only 10% or less is available, that’s why they struggle with 100 million barrels.” Global oil demand is about 102 million barrels a day, according to the IEA, putting the scale of available stockpiles into sharper perspective.
The loss of inventory buffers has made the market more vulnerable to disruptions and raised the level at which prices may be supported, said Mike Wirth, chief executive of Chevron. The immediate concern is not simply the quantity of oil held in storage but how much can actually be brought into the market. Operational constraints mean that some oil cannot readily be used, including crude remaining at the bottoms of storage tanks or volumes sitting in pipelines. Government rules requiring minimum emergency reserves can also prevent some stocks from being released.
Executives at the London conference said the strain could persist beyond next year because rebuilding inventories will have to take place alongside meeting ongoing global demand. Nasser said there was substantial demand for additional storage capacity around the world. Shaikh Nawaf Al-Sabah, chief executive of Kuwait Petroleum Corporation, said his company was seeking to expand storage domestically and at its overseas refineries.
The market is also increasingly dependent on oil shipments continuing to leave the Middle East by sea. Russell Hardy, chief executive of commodities trader Vitol, said the world was reliant on those exports “to keep things in balance as we go through winter, because there aren’t any more inventories to drain in the West”. The statement reflects the reduced ability of consuming countries to compensate for another major disruption by releasing commercial reserves.
US government stocks provide another indication of how far inventories have fallen. Crude oil held in the US Strategic Petroleum Reserve is at its lowest level since October 1982, according to Department of Energy data. The reserve has traditionally provided an additional source of emergency supply, but its current level limits the cushion available to respond to further disruptions.
Natural gas stocks have also been depleted, creating a parallel vulnerability in energy markets. Tengku Muhammad Taufik, chief executive of Petronas, warned that a severe winter could trigger a sharp escalation in gas prices during the first quarter of 2027 if storage falls to minimal levels. He described the potential consequences as a “bloodbath” in the gas market.
The warnings come as governments and energy companies have already resorted heavily to stored supplies to reduce the impact of disruptions. With oil demand running at about 102 million barrels a day and much of the remaining commercial inventory unavailable for immediate use, the IEA’s planned 100 million-barrel release represents another intervention in a market where, according to Nasser, “Only 10% or less is available”.
