Amid emerging signs of peace in the Middle East conflict, the international crude oil market experienced a significant sell-off on Monday. As of the latest update, the two major crude benchmarks, Brent and WTI futures, both fell by more than 5% during the day. With oil prices once again approaching the key psychological level of $90 per barrel, investor concerns over a renewed escalation of conflict in the Middle East have notably eased.

However, even if a U.S.-Iran framework agreement is reached and navigation through the Strait of Hormuz resumes, the processes of clearing crude oil transportation, restarting oil fields, and repairing facilities will require extensive time. This implies that the global market will still have to continue depleting existing inventories, preventing oil prices from returning to pre-conflict levels in the short term. Since the temporary ceasefire between the U.S. and Iran, the international oil market may appear calm on the surface, but this is merely an illusion: as global crude inventories decline at a record pace, the profound impact of supply shortages is set to fully manifest.

Due to the ongoing blockage of the Strait of Hormuz, a critical global energy chokepoint, oil market inventories are sounding alarm bells. Fatih Birol, Executive Director of the International Energy Agency (IEA), recently stated during the G7 finance ministers' meeting in Paris, France, that commercial oil inventories are "declining sharply" due to the Middle East conflict, with remaining supply lasting "only a few weeks."

Goldman Sachs, based on calculations of global crude oil inventories including commercial stocks and national strategic reserves, reported that total inventories as of the end of April could cover 101 days of demand, potentially dropping to 98 days by the end of May. For refined products, global inventories could meet 50 days of demand before the Middle East conflict erupted, but now only cover 45 days. Even if navigation through the Strait of Hormuz begins to recover soon, it would take at least several weeks to return to normal, with inventories expected to decline further before the end of June.

In a report dated May 20, Goldman Sachs noted that global crude and refined product inventories are decreasing at a record pace, with an average daily drawdown of 8.7 million barrels since May. This rate is more than double the average depletion speed since the outbreak of the Middle East conflict and represents a historical high.

Earlier this month, the IEA's monthly oil data showed that global crude and refined product inventories fell by nearly 4 million barrels per day in April, a volume exceeding the combined oil consumption of the United Kingdom and Germany. Buffer stocks used by countries to withstand supply shocks are at risk of depletion. "Persistent supply disruptions and rapidly shrinking buffer inventories indicate that a sharp spike in oil prices may follow," the IEA stated. Since the conflict began, global oil inventories have plummeted by nearly 250 million barrels, with an even steeper decline if crude stranded in the Gulf region and unable to be shipped is excluded. This forecast is based on the assumption that the U.S.-Iran conflict ends by early June; if hostilities persist longer, Europe would need to further reduce its oil demand.

IEA member countries have coordinated releases of strategic reserves to curb soaring prices, but this has been insufficient to counteract the extreme tightness in the physical market. The agency indicated that even if the Strait of Hormuz reopens, it would take at least two to three months for trade flows to normalize, after which Middle Eastern oil producers could resume regular production. Even if geopolitical conflicts subside, the global crude market is expected to remain in a state of "severe undersupply" until October.

Amin Nasser, CEO of Saudi Aramco, the world's largest oil producer, issued a similarly grave warning: even if shipping resumes immediately, the market would require months to rebalance; if disruptions persist for several more weeks, the supply gap could extend into 2027. Sultan Al Jaber, CEO of Abu Dhabi National Oil Company, also stated plainly that even if the U.S.-Iran conflict ends immediately, oil transit volumes through the Strait of Hormuz would not fully recover before the first or second quarter of 2027.

Mike Wirth, CEO of Chevron, recently noted that the key issue is not oil prices but rather the ability to obtain fuel. "In the coming weeks, we will see (supply shortages) spreading throughout the system."

Jeff Currie, Chief Strategy Officer for Energy Pathways at The Carlyle Group, stated in a media interview on Monday that Asian oil market inventories have fallen to the "tank bottom"—meaning Asian oil markets are nearing minimum operating levels, with European markets likely to follow suit, and the U.S. potentially facing severe shortages by July. Currie warned that current global inventory aggregate data might be misleading, as much of the world's stored oil resources cannot be immediately utilized industrially.

He had previously indicated that once a genuine shortage occurs, oil price movements would exhibit "non-linear" increases.

Société Générale believes that if the Strait of Hormuz does not reopen until the end of June, the market will face "deeper and longer-lasting pressure," with physical supply relief possibly delayed until the end of August and a true market normalization potentially not occurring until September. The bank's commodities research team stated that while the oil market currently maintains a superficial "illusion of stability," its underlying system is actually in a state of "extreme tightness."