By JBizNews Desk | May 10, 2026
A new estimate from Morgan Stanley shows the world is burning through its oil reserves at the fastest pace ever recorded, leaving the global economy increasingly exposed to fuel shortages, inflation shocks and prolonged energy-market volatility as the Iran conflict continues choking supply flows through the Strait of Hormuz.
Nearly two months into the near-closure of the strategic waterway, global inventories have fallen so sharply that banks, energy executives and government agencies are warning the damage may continue long after the fighting itself ends. Analysts say the market’s normal buffer against disruption — the vast storage system of crude oil and refined fuels that stabilizes prices during crises — is rapidly disappearing.
Morgan Stanley estimates global oil stockpiles declined by roughly 4.8 million barrels per day between March 1 and April 25, a drawdown larger than any previous quarterly inventory decline tracked by the International Energy Agency. Crude oil accounted for nearly 60% of the depletion, with refined fuels making up the remainder.
The figures offer one of the clearest measurements yet of how severely the Hormuz disruption has hollowed out the global energy system.
Goldman Sachs issued a similar warning this week, estimating that visible global oil inventories are approaching their lowest levels since 2018. The bank estimates total oil stockpiles have now fallen to approximately 101 days of forward demand, with inventories potentially dropping as low as 98 days of demand by the end of May if shipping disruptions continue.
While Goldman stopped short of predicting operational shortages this summer, analysts at the bank described the speed of the inventory collapse and the magnitude of supply losses across some fuel categories as “concerning.”
The warnings are increasingly being echoed directly by the leaders of the world’s largest energy companies.
Patrick Pouyanné, chief executive of TotalEnergies, told investors during the company’s earnings call that global hydrocarbon inventories are currently being depleted at a rate of roughly 10 million to 13 million barrels per day in order to balance the market.
“We would exit the conflict with clearly some very low inventories,” Patrick Pouyanné said, warning that even a near-term reopening of the Strait of Hormuz would still leave the market deeply depleted.
ExxonMobil chief executive Darren Woods delivered an equally stark assessment.
“It’s obvious to most that if you look at the unprecedented disruption in the world supply of oil and natural gas, the market hasn’t seen the full impact of that yet,” Darren Woods said. “There’s more to come if the Strait remains closed.”
The inventory collapse is increasingly becoming both an energy problem and a broader economic one.
For consumers, the most immediate consequence is appearing at gasoline stations and inside airline ticket pricing. Morgan Stanley warned this week that U.S. gasoline inventories are on track to fall below 200 million barrels by the end of August, levels analysts described as historically tight heading into peak summer driving season.
“The U.S. gasoline market is genuinely tight and tightening further into summer,” Morgan Stanley analysts wrote.
National average gasoline prices have already climbed above $4.50 per gallon, the highest level in roughly four years, while diesel prices continue pressuring freight, logistics and manufacturing costs globally.
Energy traders say the situation is becoming particularly dangerous because the current supply shock is no longer isolated to crude oil itself. Inventories across diesel, jet fuel and refined products are now tightening simultaneously, limiting the market’s ability to absorb additional disruption.
Outside the Middle East, the hardest-hit region has become Asia-Pacific.
Oil inventories across Asia excluding China have fallen by approximately 70 million barrels since the conflict began, according to data from geospatial analytics firm Kayrros. Japan and India have both dropped to at least 10-year seasonal lows for petroleum inventories, with Japan’s stockpiles reportedly falling roughly 50% and India’s down approximately 10% since the war escalated.
Pakistan’s petroleum minister said last month the country holds only about 20 days of commercial refined-product reserves.
Diesel markets are showing especially severe stress.
Sumit Ritolia, analyst at commodity intelligence firm Kpler, described diesel as “the lifeblood of the global economy,” warning that inventory drawdowns across onshore storage, vessels at sea and major global trading hubs are increasingly bridging supply gaps that cannot be sustained indefinitely.
The pressure is now spreading into shipping rates, food production, industrial manufacturing and airline operations.
For financial markets, the inventory collapse has become a major driver of inflation expectations and recession risk calculations. Rising fuel costs are already filtering into freight contracts, airline hedging activity, agricultural inputs and industrial supply chains, while central banks face renewed pressure over whether higher energy costs could reignite inflation globally.
Energy-sector analysts at several investment banks say the longer inventories remain depleted, the greater the probability oil markets experience sharp price spikes from even relatively minor new disruptions.
China presents a more complicated picture.
According to Kayrros, Chinese crude inventories have remained comparatively stable and may have even risen during portions of the conflict. Beijing and Seoul are also reportedly considering resuming some refined-product exports that had previously been reduced, a move analysts say could modestly slow the pace of the global drawdown.
But commodity strategists caution that falling demand across parts of Asia, Africa and Latin America may reflect economic stress rather than healthy market rebalancing, as higher fuel prices increasingly force consumption cuts in price-sensitive economies.
The U.S. Energy Information Administration now expects Brent crude to average approximately $115 per barrel during the second quarter of 2026, with prices remaining elevated well into 2027 even under scenarios where the Strait of Hormuz gradually reopens.
The agency warned that attacks on regional energy infrastructure and continued uncertainty surrounding the duration of the conflict have embedded a lasting geopolitical risk premium into oil prices that may not disappear quickly.
Even if Hormuz reopened immediately, the EIA noted, restoring global trade flows to anything resembling prewar conditions would likely require months.
What the inventory data ultimately reveals is a global energy market that has already absorbed one of the largest supply shocks in modern history and now has very little remaining capacity to absorb another one.
The world entered the Iran conflict with expanding oil inventories and falling fuel prices. It is now moving into the peak summer demand season with stockpiles near multi-year lows, gasoline prices near four-year highs, and the chief executives of ExxonMobil and TotalEnergies publicly warning that the full economic consequences of the disruption have not yet fully surfaced.
The market’s buffer is rapidly disappearing.
What happens next depends largely on one question: how long the Strait of Hormuz remains constrained — and whether the global economy can withstand the strain long enough for it to reopen.
JBizNews Desk
