Global oil inventories are facing a steep decline, with warnings from strategists that shortages could impact Europe as soon as this month. Jeff Currie, co-chairman at Abaxx Commodity Exchange, highlighted that the current supply crunch is not yet reflected in oil prices, which may soon become volatile as demand rises with the upcoming U.S. Memorial Day and U.K. spring bank holidays. As inventories dwindle, Currie anticipates that prices could spike dramatically, revealing the market’s true willingness to pay for limited supply.
Analysts from Societe Generale echoed these concerns, describing the oil market as operating under a “veneer of stability,” while the underlying supply chain remains acutely stressed. The ongoing U.S.-Iran conflict has severely constrained oil flows through the Strait of Hormuz, which typically accounts for a significant portion of global supply. Even if the Strait reopens soon, logistical delays could prolong tightness in the market, with normalization not expected until late 2027.
Market professionals should brace for potential price spikes, as tight inventories and geopolitical tensions could lead to significant volatility in oil prices, potentially pushing Brent crude toward $150 per barrel if conditions worsen.
Source: cnbc.com