Oil stockpiles draw down at record 8.7M barrels a day: Goldman Sachs

Global visible crude and fuel stockpiles drained at a record 8.7 million barrels per day in May, Goldman Sachs said Thursday — nearly double the average pace since the Iran war began throttling Persian Gulf exports in March. Brent crude, the international benchmark, traded near $106 a barrel, up more than 70 per cent year to date but well short of the $126 peak touched in the conflict’s opening weeks.

Three months into the Strait of Hormuz closure, estimated oil exports through the chokepoint remain at roughly 5 per cent of normal. That has starved refineries across Asia and Europe of the roughly 17 million barrels a day that typically transit the waterway. And inventories are now draining faster than at any point since the war began — even as peace-deal speculation knocked $6 to $8 off crude this week.

“Physical markets continue to tighten, as estimated oil exports through the strait remain at a very low 5% of normal,” Goldman analysts Yulia Zhestkova Grigsby and Daan Struyven wrote in a note to clients.

Roughly two-thirds of the May drawdown reflects oil-on-water stocks declining as exports fall faster than imports, the Goldman note detailed. On land, the United States posted a record 17.8 million-barrel weekly crude inventory decline including barrels drawn from the Strategic Petroleum Reserve. The downstream picture offers no relief: European jet fuel imports are running 60 per cent below their 2025 average. Chinese domestic fuel sales fell 22 per cent month-on-month in April. Taken together, the numbers suggest the supply squeeze is forcing demand destruction before it even reaches the pump.

Thursday’s data highlighted a widening disconnect between the physical market and the price. Brent fell about 6 per cent on Wednesday after President Donald Trump said US-Iran negotiations had entered their “final stages.” A Bloomberg Intelligence survey published the same day found most market participants expect crude to average $81 to $100 over the next 12 months — a band that implicitly prices in a Hormuz resolution. That distribution, BI analysts Salih Yilmaz and Will Hares wrote, suggests the market sees geopolitical risk as persistent rather than a fundamental reset of the long-term price regime.

JPMorgan Chase sees it in starker terms. Head of global commodities research Natasha Kaneva cautioned earlier in May that inventories are being drawn at an unsustainable clip, with certain categories of stored crude already approaching operational minimums — the level below which a tank cannot physically be drained further without damaging the infrastructure.

“Inventories are acting as the shock absorber of the global oil system,” Kaneva said. “But not every barrel can be drawn.”

Goldman’s own modelling puts numbers on the trajectory. Every month the Strait of Hormuz stays closed adds roughly $10 to the year-end price of oil, the bank estimates. If the disruption persists through summer, Brent would pass $130 by the northern hemisphere autumn. CNBC reported Thursday that crude edged higher on the day as traders weighed peace-talk headlines against inventory data showing no sign of loosening — a split-screen that will not resolve until either a deal materialises or the buffer runs out.

Two decades of supply shocks — Libya, Russia’s invasion of Ukraine — were absorbed by that buffer. It is now shrinking at a pace no prior disruption matched.