Global commercial oil stocks are thinning at worrying rates, with remaining reserves estimated to last only a few weeks. The ongoing conflict in the Middle East and the closure of the Strait of Hormuz have worsened a supply crisis that concerns governments and markets.
In this scenario, the United States has decided to extend the waiver on sanctions on Russian oil for another 30 days, while G7 finance ministers, meeting in Paris, fear a new wave of inflation that could force central banks to keep interest rates high or even raise them.
The IEA’s warning on stocks
The International Energy Agency (IEA) has issued a warning signal. Executive Director Fatih Birol, present at the G7 finance ministers’ meeting, warned that commercial oil stocks are depleting very rapidly.
“I think they are decreasing very fast,” Birol told reporters, as reported by Bloomberg. He specified that the reserves will last “a few weeks, but we must be aware that they are declining rapidly.”
As Reuters writes, until the US-Israel attacks against Iran at the end of February, there was a substantial surplus of oil on the market, with high commercial stocks. The subsequent war and the blockade of the Strait of Hormuz reversed the situation within a few weeks.
The IEA has drastically revised its forecasts: global oil supply will drop by about 3.9 million barrels per day in 2026, compared to the previous estimate of 1.5 million.
Between March and April, observed stocks fell by 246 million barrels, the fastest pace ever recorded. The Agency had already coordinated the largest release of strategic reserves in history: 400 million barrels, of which 164 million were released onto the market by May 8.
However, as the head of the IEA reminded, “these reserves are not infinite.” With the arrival of the planting season and summer travel in the northern hemisphere, demand for diesel, fertilizers, jet fuel, and gasoline is expected to grow further.
Inflation and food prices: the double risk
Birol also warned about broader repercussions. The rise in fertilizer and diesel prices, right at the start of the agricultural and tourist season, “could have greater implications on food prices and, together with higher energy costs, give a strong push to inflation numbers,” he emphasized, according to Bloomberg.
Analysts interviewed by CNBC confirm the critical picture. Jeff Currie of Abaxx Commodity Exchange spoke of possible deficits in Europe as early as the end of this month. “Prices will become nonlinear once shortages really hit,” he warned, noting that the market is in the seasonally weakest demand phase, but that with the approach of Memorial Day and British holidays, pressure will rise rapidly.
Experts at Société Générale also describe an apparent “veil of stability” under which the system remains “acutely stressed,” with delays of at least 52 days to reactivate flows even if the Strait reopens.
Washington extends the waiver on Russian oil
To try to ease the squeeze, the United States has extended the waiver allowing the purchase of Russian oil already loaded onto ships for another 30 days.
The Treasury issued a new license valid until June 17, as confirmed by Bloomberg. Secretary Scott Bessent explained on X that the measure “will help stabilize the physical crude market” and allow the most vulnerable countries to access volumes of Russian oil currently stuck at sea.
This is the second reversal in a few weeks. As highlighted by the Guardian, the decision risks creating friction with European allies, who consider sanctions on Moscow a key tool to limit funding for the war in Ukraine.
At the same time, however, several Asian importing countries had strongly requested to maintain this supply channel.
The G7 and concerns over inflation and markets
During the Paris meeting, G7 finance ministers shared strong concerns about the economic consequences of this crisis.
As reported by Reuters, there is a real fear that the shock in oil prices will fuel a new inflation spike, forcing central banks to keep rates high or raise them further.
Bond markets reacted with sell-offs, pushing investors to bet on rate hikes. French Minister Roland Lescure spoke of a “correction” rather than a crash, while his Japanese counterpart Satsuki Katayama reiterated that each country will have to manage volatility with its own tools.
The International Monetary Fund has urged everyone to avoid measures that could worsen the situation.
