economy
‘This is bad’: Strategists see European oil shortages within weeks as inventories are depleted
The Iran war oil squeeze could trigger shortages in Europe within weeks, and keep global inventories depleted until 2027, strategists warn.
TL;DR
- Global oil stockpiles are plummeting, with potential shortages looming for Europe by the end of the month.
- Inventories may not recover until December 2027, according to strategists.
- Physical shortages could hit Europe 'any day now,' with prices expected to rise 'non-linear' once they occur.
- The oil market is currently in its 'shoulder months,' but demand will rise sharply with upcoming holidays.
- Societe Generale analysts describe the market as having a 'veneer of stability' but being 'acutely stressed' underneath.
- Flows through the Strait of Hormuz, a key supply route, have been constrained since February 28.
- Even if the Strait reopens, a complex supply chain means delays of at least 52 days for new oil to come online.
- A late June reopening could push meaningful normalization of supply back to September, while a longer delay could push prices toward $150 per barrel.
- Oil prices ticked higher on Monday, with Brent crude at $110.73 and WTI futures at $106.86.
- Strategists emphasize the 'availability of oil' over its price, with Iranian intentions to 'inflict pain' cited.