Oil stockpiles fall globally and in India as Hormuz disruptions tighten supply

Global oil stockpiles are shrinking at the fastest pace on record this month as the Middle East war continues to choke supplies and tighten energy markets, according to a new note from Goldman Sachs as cited by Bloomberg.The Wall Street bank said visible crude and fuel inventories have fallen by 8.7 million barrels a day so far in May, nearly double the average pace seen since the conflict began. Analysts Yulia Zhestkova Grigsby and Daan Struyven noted the sharp drawdown reflects a market still struggling with severe supply disruptions tied to the conflict around the Strait of Hormuz.Also read: China kept building its crude stockpile in April despite Iran crisis“Physical markets continue to tighten,” the Goldman analysts wrote, estimating oil exports through Hormuz remain at just 5% of normal levels because of what they described as a double blockade involving both Iran and the US.Brent crude was trading near $106 a barrel on Thursday. Prices are more than 70% higher this year, though still below the war-era peak above $126.Draining tanksThe report paints a picture of a global oil system rapidly consuming emergency buffers built up before the conflict erupted. According to Bloomberg, governments have already coordinated strategic reserve releases in an attempt to cool prices and stabilise supply.Goldman said about two-thirds of May’s inventory declines came from a drop in “oil on water,” meaning fewer cargoes were moving globally as exports weakened faster than imports. The bank also said weaker imports were no longer limited to Asia and had begun spreading into Europe.Jet fuel imports into Europe were running about 60% below 2025 averages, the analysts said.The warning comes days after International Energy Agency Executive Director Fatih Birol said commercial oil inventories were falling at an accelerated pace. The IEA has also estimated the market could remain “severely undersupplied” until October even if the conflict ends soon.Also read: Rs 10.9 lakh crore burden: Iran shock can take a load off India's backChina slowdown, US squeezeGoldman said China, the world’s biggest crude importer, was showing “a lack of appetite” for oil as refinery demand softened. Imports have fallen sharply and domestic fuel sales dropped 22% last month, partly because of weaker economic activity, the bank said, citing its economists.In the US, crude inventories — including the Strategic Petroleum Reserve — fell by a record 17.8 million barrels last week, according to official data cited by Bloomberg. Stockpiles at the key Cushing, Oklahoma hub are also edging closer to so-called “tank bottoms,” a level at which oil becomes difficult to extract efficiently.Despite the rapid depletion since March, Goldman noted global inventories remain broadly flat compared with a year earlier because countries had accumulated a “sizable buffer” in the nine months before the war.The bank added that the start of the US summer travel season this weekend could add fresh pressure on fuel markets by lifting demand for gasoline, diesel and jet fuel.(With inputs from Bloomberg)

Analysts believe that if supply disruptions persist for an extended period, refiners may eventually have to scale back refinery runs or reduce crude processing activity. They say this could partly explain Prime Minister Narendra Modi urging citizens to conserve fuel.

New Delhi: India's crude oil stocks have fallen 15% since the Iran conflict began in end-February as refiners moved to maintain processing rates amid declining imports, according to estimates by commodities data and analytics firm Kpler.Sustained supply constraints could eventually force refiners to cut runs or pull back on crude processing-a factor analysts say may partly explain Prime Minister Narendra Modi's latest call for fuel conservation. India's crude stocks are currently at 91 million barrels, slipping from 107 million barrels at the end of February, according to Kpler's inventory data, which includes strategic petroleum reserves (SPR), commercial inventories, and refinery stocks. The estimates exclude pipeline stocks.India consumes about 5 million barrels of oil a day, allowing current inventories to cover about 18 days of demand. The current crude stocks can feed up to 60 days of national consumption, the government said Monday, without elaborating. The stock estimate includes cargoes loaded on India-bound ships, said Sujata Sharma, joint secretary in the petroleum ministry on Thursday.131105700Moderate DrawdownIt also includes pipeline stocks.India's crude imports averaged 4.5 million barrels per day (mbd) in the past two and a half months, declining from the pre-war level of 5 mbd, said Nikhil Dubey, lead analyst, refining, at Kpler. "However, refinery run rates have not declined proportionally with the drop in imports, suggesting that part of the supply gap is currently being met through inventory drawdowns, most likely from refinery storage tanks."The current drawdown in inventories is "moderate", said Dubey.The drawdown could have been larger had Nayara Energy not undertaken a maintenance shutdown at its 400,000 barrels-per-day refinery in Gujarat in April, according to an industry executive."With near-term prospects for a reopening (of the Strait of Hormuz) appearing increasingly uncertain, India cannot continue relying on inventory drawdowns indefinitely," said Dubey.He warned that refineries may eventually need to reduce run rates in line with lower oil supplies. "This could also explain why the Prime Minister has recently called for fuel conservation efforts," he said.Global oil inventories fell by 129 million barrels in March, and by a further 117 million barrels in April, according to the International Energy Agency (IEA). "With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA warned Wednesday.The near closure of the Strait of Hormuz has cut oil output from the Gulf by 14.4 mbd below pre-war levels. This has severely hit global oil supply, which declined by a further 1.8 mbd in April to 95.1 mbd, taking total losses since February to 12.8 mbd.Saudi Arabia and the UAE-possessing alternative export routes-continued shipments, while Iraq and Kuwait-which depend entirely on the Strait of Hormuz -have been unable to export any volumes.

New Delhi: India's crude oil stocks have fallen 15% since the Iran conflict began in end-February as refiners moved to maintain processing rates amid declining imports, according to estimates by commodities data and analytics firm Kpler.Sustained supply constraints could eventually force refiners to cut runs or pull back on crude processing-a factor analysts say may partly explain Prime Minister Narendra Modi's latest call for fuel conservation. India's crude stocks are currently at 91 million barrels, slipping from 107 million barrels at the end of February, according to Kpler's inventory data, which includes strategic petroleum reserves (SPR), commercial inventories, and refinery stocks. The estimates exclude pipeline stocks.India consumes about 5 million barrels of oil a day, allowing current inventories to cover about 18 days of demand. The current crude stocks can feed up to 60 days of national consumption, the government said Monday, without elaborating. The stock estimate includes cargoes loaded on India-bound ships, said Sujata Sharma, joint secretary in the petroleum ministry on Thursday.131105700Moderate DrawdownIt also includes pipeline stocks.India's crude imports averaged 4.5 million barrels per day (mbd) in the past two and a half months, declining from the pre-war level of 5 mbd, said Nikhil Dubey, lead analyst, refining, at Kpler. "However, refinery run rates have not declined proportionally with the drop in imports, suggesting that part of the supply gap is currently being met through inventory drawdowns, most likely from refinery storage tanks."The current drawdown in inventories is "moderate", said Dubey.The drawdown could have been larger had Nayara Energy not undertaken a maintenance shutdown at its 400,000 barrels-per-day refinery in Gujarat in April, according to an industry executive."With near-term prospects for a reopening (of the Strait of Hormuz) appearing increasingly uncertain, India cannot continue relying on inventory drawdowns indefinitely," said Dubey.He warned that refineries may eventually need to reduce run rates in line with lower oil supplies. "This could also explain why the Prime Minister has recently called for fuel conservation efforts," he said.Global oil inventories fell by 129 million barrels in March, and by a further 117 million barrels in April, according to the International Energy Agency (IEA). "With global oil inventories already drawing at a record clip, further price volatility appears likely ahead of the peak summer demand period," the IEA warned Wednesday.The near closure of the Strait of Hormuz has cut oil output from the Gulf by 14.4 mbd below pre-war levels. This has severely hit global oil supply, which declined by a further 1.8 mbd in April to 95.1 mbd, taking total losses since February to 12.8 mbd.Saudi Arabia and the UAE-possessing alternative export routes-continued shipments, while Iraq and Kuwait-which depend entirely on the Strait of Hormuz -have been unable to export any volumes.