Persisting Middle East conflicts continue to disrupt global energy supplies, with inventories at the United States' crucial Cushing storage hub rapidly approaching their operational minimum. Analysts warn that if the Strait of Hormuz remains closed, the crude oil market could face risks of extreme price volatility and even a price surge.
According to data from the U.S. Energy Information Administration, for the week ending June 5th, stockpiles at the Cushing, Oklahoma storage center had fallen to approximately 21.6 million barrels. As the designated delivery point for the New York Mercantile Exchange's WTI crude oil futures, Cushing holds a central position in the global oil pricing system. Industry insiders point out that once inventories fall below the 20 million barrel warning threshold, they will enter the "operational minimum level"—at which point operations such as product blending, blend quality, and pipeline transportation efficiency could all be impacted.
Energy analyst Jeremy Owen stated that when inventories are at the operational minimum, there is not enough crude oil in the tanks for pumping and inter-tank transfers, making blending operations challenging. This could lead to delays or interruptions in crude oil shipments from Cushing. Media reports citing internal assessments suggest Cushing stocks could hit this dangerous level as soon as the end of June.
The direct cause of the sharp inventory decline is the ongoing blockade of the Strait of Hormuz. Since the outbreak of the US-Iran war in late February, passage through this critical waterway, which handles about one-fifth of global oil shipments, has been obstructed. Middle Eastern crude oil supplies have significantly decreased, forcing global buyers to turn to the United States for alternative sources. Consequently, U.S. crude oil exports have reached record highs, with large volumes of crude oil accelerating outflows from Cushing.
More worryingly, this inventory crisis is not a problem unique to the United States. Crude oil inventories in developed economies are declining at a rate exceeding 6 million barrels per day. Global inventories are only about 100 million barrels away from the operational stress level widely recognized by the industry. Chief Investment Strategist Liz Ann Sonders warned that executives from Chevron Corporation (NYSE: CVX) and Exxon Mobil Corporation (NYSE: XOM) have indicated that if the Strait cannot be reopened soon, oil prices could reach $150 per barrel within weeks.
Analysts note that once inventories fall to critical levels, any unexpected supply disruption—even a hurricane or a pipeline failure—could be dramatically amplified by the market, triggering a new round of severe turbulence.