Global oil stockpiles could hit record lows if Strait of Hormuz remains closed

Global oil inventories are falling at a record pace to compensate for the big supply disruption in the Middle East and they will approach critical levels if the Strait of Hormuz does not reopen. Higher prices for oil and fuel are likely ahead of peak demand this summer as a consequence, the International Energy Agency warned this week in its monthly update. "Rapidly shrinking buffers amid continued disruptions, may herald future price spikes ahead," the IEA said. The oil market has not felt the full impact of the supply loss thanks to commercial inventories held by the industry, strategic reserves controlled by governments and tankers in transit, Exxon Mobil CEO Darren Woods said on the oil major's first-quarter earnings call. These stocks mitigated the impact of the disruption in March and April, Woods said. But commercial inventories will eventually fall to levels where they can longer serve as a supply source, the CEO said. "We anticipate as that happens and the strait remains closed, that we will continue to see increased prices in the marketplace," Woods said. Stockpiles near record lows Inventories were near a decade high at just over 8 billion barrels at the end of February, Swiss bank UBS estimated in a Tuesday report. By end of April, stockpiles fell to 7.8 billion barrels, UBS analysts said. Inventories will approach record lows of 7.6 billion barrels by end of May if demand remains the same month over month, the UBS analysts said. …