The world is short of 1.15 billion barrels of oil in the Middle East conflict

After four months of near blockade, the Strait of Hormuz reopened when Iran and the US signed a memorandum of understanding this week. Previously, during the conflict, it was almost impossible for oil to leave the Middle East, causing a world shortage of about 1.15 billion barrels, according to Kpler’s summary.

Before the war, the global oil market had a large oversupply, helping to absorb supply shocks in the early stages. However, this situation quickly disappeared and turned into a shortage, when oil ships could not move through the Strait of Hormuz.

Brent oil prices therefore peaked at 126.41 USD per barrel, forcing many countries to open reserve warehouses to cool the market. According to Kpler, over the past few months, global oil inventories have decreased by about 190 million barrels.

Strategic oil reserves of International Energy Agency (IEA) member countries fell to their lowest level since 1990. Among them, the US’s emergency oil reserves were at their lowest level in 43 years.

At Cushing (Oklahoma state) – an important US oil transit center, oil inventories fell to levels that put operating pressure. The situation is like a coffee pot with only residue left at the bottom, meaning the oil is still in the tank but it is very difficult to exploit and operate the pipeline.

According to managers and analysts, the US-Iran agreement was reached at a very important time, when the world oil market is about to reach the limit of safe operation. “We will run out of reserves in about 4 weeks,” President Donald Trump said at the G7 conference in Versailles on June 17.

After the announcement of the agreement, Brent and WTI oil prices are currently below 80 USD per barrel. However, experts warn that reopening the Strait of Hormuz does not mean the circulation problem is resolved immediately.

To restore the energy flow, the parties need to clear mines, return empty ships, restart mines and spend more time transporting oil to refineries and consumer markets. The entire process can take many months.

In the meantime, the world can continue to rely on remaining reserves. Ms. Helima Croft, global head of commodity strategy at RBC Capital Markets, said that many people thought it was all over. “There is still a huge logistical challenge to return the market to its previous state,” she said.

According to the base scenario of Citi Bank (USA), there is a 60% probability that the flow will normalize sustainably, transition to a state of oversupply and prices will tend to decrease in the next 6-12 months, about 60-65 USD per barrel in the first quarter of 2027.

For oil prices to fall further, traders need to see evidence of increased cargo traffic in the Strait of Hormuz, noted Tim Waterer, chief market analyst at KCM Trade. “Brent oil prices may fluctuate around 75-90 USD in the short term,” he forecast.

According to calculations by CNNeven if global oil supply increased by nearly 5 million barrels per day, it would still take the market about a year to compensate for the 1.15 billion barrels of oil shortage during the war period.

World oil demand will increase to 113.3 million barrels per day by 2030 from 105.1 million barrels in 2025, according to OPEC.