Global oil stockpiles are falling at a record 8.7 million barrels per day in May as Hormuz flows sit at just 5% of normal levels, Goldman Sachs said, with Brent crude trading near $106, up over 70% this year
Summary:
- Global visible crude and fuel stockpiles have fallen by 8.7 million barrels per day so far in May, a record pace and nearly double the average rate since the conflict began
- Flows through the Strait of Hormuz remain at approximately 5% of normal levels, with reduced exports the primary driver of the drawdown
- Around two-thirds of the inventory decline reflects lower oil-on-water stocks as exports have fallen faster than imports
- Demand weakness is compounding the supply disruption, with Chinese refinery imports and fuel sales dropping sharply
- Europe’s jet fuel imports are running approximately 60% below 2025 average levels
- Brent crude was trading near $106 a barrel, more than 70% higher year to date but below the war-era peak of above $126
Global oil inventories are declining at an unprecedented rate this month, with Goldman Sachs reporting that visible stockpiles of crude and fuel have fallen by 8.7 million barrels per day in May, a record pace that is nearly double the average drawdown seen since the Middle East conflict began.
The proximate cause is the near-total closure of the Strait of Hormuz, where flows have fallen to approximately 5% of normal levels following the US-Israeli strikes on Iran in late February. Goldman said roughly two-thirds of the inventory decline reflects a drop in oil-on-water stocks, the floating crude in transit between producers and refiners, as export volumes have collapsed faster than refiners have been able to reduce intake from alternative sources. The pace of deterioration in May represents a significant acceleration from earlier in the conflict and suggests the market’s initial inventory buffer is being exhausted more rapidly than many had anticipated.
The demand picture adds a layer of complexity that is doing little to stabilise prices. China, the world’s largest crude importer, has seen a sharp drop in both refinery imports and domestic fuel sales, a signal that elevated energy costs are already feeding through into economic activity and dampening consumption. That demand destruction provides some offset to the supply shock, helping explain why Brent crude at around $106 a barrel remains well below the war-era peak above $126 even as the inventory situation deteriorates.
In Europe, the disruption is registering most visibly in aviation, with jet fuel imports running approximately 60% below 2025 average levels. The scale of that shortfall points to significant operational pressure on airlines and logistics operators across the continent, with potential knock-on effects for travel capacity and freight costs.
Brent’s year-to-date gain of more than 70% captures the severity of the supply shock but also the market’s attempt to price in some eventual resolution. With Hormuz flows at 5% of normal and inventories falling at record pace, the trajectory of the next several weeks will depend heavily on whether diplomatic progress or alternative supply routes can begin to close a gap that is widening by the day.
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An 8.7 million barrel per day drawdown, nearly double the average pace since the conflict began, is a supply signal of extraordinary severity and one that puts a floor under oil prices even as demand weakens. Brent at $106, more than 70% higher on the year but well off the war-era peak above $126, reflects a market trying to price both the supply destruction and the demand destruction simultaneously.
The China data is particularly significant: sharp drops in refinery imports and fuel sales suggest the world’s largest crude importer is already absorbing an economic hit from elevated prices, which limits the upside for oil even as inventories collapse. Europe’s jet fuel imports running 60% below 2025 averages points to severe aviation sector disruption with knock-on implications for travel, logistics and airline earnings
