Global Oil Inventories Face Depletion Risk Within 10–15 Weeks, CBA Analyst Warns
Middle East oil flows have recovered towards pre-war levels, but low inventories and fragile shipping conditions leave global energy markets vulnerable to another supply disruption
Global oil markets remain exposed to renewed supply pressure, with Commonwealth Bank commodities analyst Vivek Dhar warning that current oil and refined-fuel inventories could face depletion risks within 10–15 weeks in some regions.
The warning comes despite a recent recovery in Middle Eastern crude exports. Ship-tracking data indicates that flows from the region have moved close to, and in some measures above, pre-war levels. However, the current increase in exports may not be sustainable, particularly while geopolitical risks remain elevated and further disruption to energy shipments remains possible.
Oil flows recover, but supply confidence remains weak
The improvement in Middle Eastern exports has helped extend the available supply cushion compared with earlier estimates. Dhar said the market now has around 10–15 weeks of oil and refined products before depletion risks become more significant, compared with his previous estimate of 5–10 weeks when Saudi Arabia's East-West pipeline was temporarily offline.
However, the increase in supply has not created widespread expectations of oversupply. Market participants remain cautious because current flows could be disrupted again, while the broader conflict continues to create uncertainty around energy infrastructure and shipping routes.
The situation contrasts with the period following the US-Iran memorandum of understanding in June, when expectations of improving supply conditions caused Brent futures to fall sharply to around US$70 a barrel in early July.
Global inventories remain historically low
One of the biggest concerns is the limited level of oil already held in storage. According to Energy Aspects, global oil inventories have fallen to around five-year lows, leaving the market with less resilience if another disruption occurs.
Lower inventories mean that even a temporary interruption to production or shipping could have a more immediate impact on prices because there would be less stored supply available to compensate.
The risk is also sensitive to changes in demand. Dhar noted that higher global oil consumption and stronger Chinese imports could reduce the amount of time before inventory depletion risks emerge, even if Middle Eastern exports remain elevated.
Shipping costs add another vulnerability
The pressure is not limited to crude availability. Shipping rates from the Arabian Gulf to Asia have risen to record levels, highlighting another potential weakness in the global oil supply chain.
Higher freight costs can increase the delivered cost of oil and make the market more sensitive to further disruptions. The elevated shipping rates also suggest that transport capacity remains tight, leaving limited room for unexpected interruptions.
What it means for investors
For investors, the latest outlook highlights the importance of oil inventories, Middle East export flows and shipping conditions. Although current supply has improved, historically low inventories mean the global market may still have limited protection against another disruption.
The key question is whether Middle Eastern oil flows remain sustainable and whether inventories can stabilise before depletion risks become more pronounced. A renewed supply shock could quickly place upward pressure on crude prices and, in turn, affect inflation, interest-rate expectations and energy-related equities.
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