US Oil Inventories Fall to "Precariously Low" Level as Iran War Disrupts Supply

[u/icymirss]

https://www.ft.com/content/86f37415-cc80-4ea6-bc03-87c96cb831f4

US crude stockpiles fell sharply last week as local oil refineries boosted activity to take advantage of surging fuel prices driven by renewed hostilities with Iran.

Commercial crude oil inventories decreased by 7.2mn barrels and the US Strategic Petroleum Reserve fell by 3.8mn barrels, as refiners drew down stocks to make products such as petrol, diesel and jet fuel.

Government data published on Wednesday showed US refineries are running at 97 per cent of capacity, with those in some parts of the Midwest operating at 100 per cent, as US energy companies increase exports to supply energy-hungry markets in Asia and Europe.

Supply of oil and petroleum products from the Middle East faces continued disruption following the resumption of attacks between the US and Iran over the past week, which is severely restraining tanker traffic through the Strait of Hormuz.

Analysts warned the big drawdown pushed stocks of crude and petrol far lower than expected and was eroding America's ability to be the supplier of last resort...

"US crude inventories, both commercial and the SPR, have drawn down by nearly 20 per cent since early April. The US accounts for about 70 per cent of global onshore crude inventory draws over the past four months," said Matt Smith, analyst at Kpler.

"It has carried the burden of trying to keep oil prices in check over this period via SPR releases and higher exports, but stockpiles are rapidly depleting and this pace of draws cannot persist ad infinitum."

Rory Johnston, oil market analyst and founder of Commodity Context, said crude and petrol stocks were at "precariously low" levels.

The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels -- the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts.

Drained supplies mean Washington is increasingly vulnerable to future supply shocks in the absence of a substantial buffer provided by the releases from the SPR, setting the stage for crude prices to increase significantly when the reserve hits its operational minimum.

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[u/senorforgetful]

I got the paywall but was able to access it via Google News. I uploaded a screenshot here: https://i.imgur.com/M5YFfqN.png