Oil Executives Warn of $200 Barrel as Inventories Dry Up
Industry leaders warn that exhausted oil inventories and the closure of the Strait of Hormuz could drive crude prices to $200 per barrel.
Global oil markets face prolonged disruption following the U.S.-Israeli war on Iran, which began in late February. The conflict has effectively closed the Strait of Hormuz and damaged critical infrastructure, resulting in the loss of three billion barrels of oil and the withdrawal of one billion barrels from global inventories.
Russell Hardy, CEO of Vitol, warned at the Energy Intelligence Forum in London that Western countries have exhausted the inventories used to offset these disruptions. He stated the crisis has evolved from a crude shortage into a refined-products crunch and a shipping crisis with soaring freight costs. Hardy cautioned that without continued flows from the Middle East, oil could reach $200 per barrel.
In response to rising diesel prices and pressure from the Donald Trump administration, G7 countries agreed to release 100 million barrels of emergency stocks. However, the International Energy Agency reported that 325 million barrels had already been released from a 400-million-barrel emergency action initiated in March.
Saudi Aramco CEO Amin Nasser noted that less than 10% of global commercial oil inventories are practically available to the market, adding that replenishing these stocks while meeting demand could take up to two years. Further complicating the crisis is a shortfall of six million barrels per day of refined products, as global refining capacity cannot compensate for shuttered facilities in the Middle East Gulf.
