Oil markets stay tight

LONDON: Global oil markets could face tighter supplies and prolonged price pressure even if the United States and Iran reach a peace agreement, as depleted inventories and disrupted shipping routes continue to strain the energy system, analysts and industry executives warned.
Commercial stockpiles, emergency reserves and oil stored at sea have helped offset the immediate shock caused by the Middle East conflict, but executives say the full impact has yet to filter through global markets.
Analysts expect inventories to continue falling in the coming weeks as countries enter the peak Northern Hemisphere summer demand season, when fuel consumption typically rises due to travel, aviation, farming and freight activity.
Goldman Sachs estimates global crude inventories could fall to their lowest level since at least 2018, even if crude flows through the Strait of Hormuz begin recovering soon.
“Even if the conflict ends in May, the world will emerge with very low inventories,” TotalEnergies Chief Executive Patrick Pouyanne said, estimating that global stock draws have already consumed at least 500 million barrels from storage.
Equinor Chief Executive Anders Opedal said the market could take at least six months to normalise even if peace is restored.
Benchmark Brent crude fell sharply on Wednesday after signs of progress in talks between Washington and Tehran, but analysts said physical fuel markets would remain tight due to supply disruptions and shipping delays.
A Reuters poll last week forecast Brent crude to average $86.38 a barrel in 2026, compared with around $62 at the start of the year.
Global inventories are expected to decline to around 98 days of demand by the end of May, down from 105 days before the conflict began in late February, according to Goldman Sachs.
Rystad Energy estimates the world has already lost around 600 million barrels of oil supply since the conflict started, with cumulative losses potentially reaching up to 2 billion barrels before flows fully normalise.
Natural gas markets have also been affected, with disruptions to Qatar’s liquefied natural gas production expected to remove between 30 million and 50 million tonnes of LNG supply, equivalent to up to 11 per cent of annual global supply.
Industry executives warned that restoring normal oil flows will take time even after shipping routes reopen. Exxon Mobil Chief Executive Darren Woods said clearing shipping backlogs and restoring normal supply chains could take one to two months after the Strait of Hormuz resumes operations.- Reuters