May 25 (THEWILL) — Global oil markets are facing what leading investment banks describe as an extreme and fast-evolving supply shock, as inventories collapse and flows through the Strait of Hormuz remain heavily disrupted.
Barclays warned that the market is now operating at a structural deficit of 6–8 million barrels per day (bpd), describing global inventories as “critically depleted” and rapidly moving toward levels that leave little buffer against further shocks.
The bank stressed that even under a recovery scenario, stocks would still sit roughly 20 million barrels below historical tight-range conditions, highlighting how far supply has fallen behind demand.
Goldman Sachs took a more alarmed stance, reporting that global oil inventory draws have accelerated to an unprecedented pace of about 8.7 million bpd since early May.
The bank linked this to severe physical disruption in maritime flows, noting that crude shipments through the Strait of Hormuz have fallen to just around 5 percent of normal volumes, effectively removing a major artery of global supply.
J.P. Morgan focused on the widening imbalance between supply disruption and demand stability, estimating that global oil supply losses expanded from 9.1 million bpd in March to 13.7 million bpd in April.
The bank emphasized that this is not demand destruction but a “forced adjustment to supply scarcity,” meaning consumers are still willing to buy but cannot access enough barrels.
These investment bank assessments align with market pricing signals, as Brent crude trades above $105 per barrel while WTI hovers near $99, reflecting heightened risk premiums.
The International Energy Agency (IEA) reinforced the warning, reporting a 246 million barrel drawdown in global inventories over two months, alongside emergency reserve releases exceeding
400 million barrels, leaving global stocks at only a few weeks of coverage.
Analysts caution that if supply routes remain constrained, the combined effect of record drawdowns and tight physical flows could intensify inflationary pressure and slow global growth significantly.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
