Oil reserves may last only weeks if Hormuz closes, analysts warn

Oil prices rose towards five-month highs as attacks on tankers in and around the Strait of Hormuz mounted and efforts to end the United States-Israel war on Iran remained deadlocked. Brent crude, the international benchmark, climbed more than $2 to $110.85 a barrel on Wednesday.

Iran's Islamic Revolutionary Guard Corps said two tankers were "set ablaze" after hitting mines at what it called an illegal crossing point in the strait, and later said it struck seven more vessels, four of which were transferring oil. Washington dismissed the claim. In September, the Houthis seized territory in Yemen close to the Bab al-Mandeb strait, a chokepoint into the Red Sea and a gateway to the Suez Canal.

Emergency stocks at lows not seen in decades

The International Energy Agency, set up in 1974 after the Arab oil embargo, requires importing members to hold at least 90 days of net imports. China and India are not members. On March 11, its 32 members agreed to make 400 million barrels available, more than double the volume released after Russia's full-scale invasion of Ukraine in 2022. The US pledged 172.2 million barrels and Japan 79.8 million.

The US Strategic Petroleum Reserve has since fallen to 283 million barrels, its lowest level since October 1982, and much of that oil was lent rather than sold and must be returned with extra barrels.

Aaron Kildow, a senior crude oil analyst at Sparta Commodities, told Al Jazeera that global strategic stocks excluding China and Iran had fallen by nearly 327 million barrels since the end of December 2025, leaving only about 400 million barrels of usable reserves worldwide. Nearly half of that sits in Japan; Europe has about 76 million barrels uncommitted, with countries such as Germany holding some back for a local emergency. "Europe is the real wildcard, both on timing and willingness," he said.

Weeks of cover, not months

Kpler analyst Muyu Xu said China's onshore crude stocks stand at 1.13 billion barrels, enough for about 80 days of refinery intake. India's reserves cover just eight days of its imports, according to Reuters. Before the war, about one-fifth of the world's oil and liquefied natural gas supplies, roughly 20 million barrels of oil a day, passed through Hormuz.

If Hormuz were shut and the Houthis blocked all Saudi tankers, Middle Eastern crude exports would fall by about 9.3 million barrels a day, from 16.8 million to roughly 7.5 million, Xu estimated. The roughly 400 million usable barrels Kildow identified could not be released fast enough to cover that: Japanese and South Korean reserves can move quickly, US barrels are staged over three months, and Europe's contribution is uncertain.

Chris Beauchamp, chief market analyst at IG Group, said the world was fortunate after the first closure. "A month or two is all we have," he said, adding that $150 a barrel was "a very distinct possibility" as higher prices destroy demand. The IEA said the sharpest squeeze would be on diesel, already nearly double the price of crude.

India and Pakistan are among the most exposed, Kildow said, because their nearest alternative supply, from West Africa, is 25 to 28 days away by sea, compared with two days from Fujairah in the UAE.

In the second quarter, ExxonMobil reported earnings of $14.5bn, Chevron $12bn and Shell nearly $10bn — their best results in years, largely down to high oil prices. In August, US President Donald Trump said such companies were "making too much money based on a shortage".

Source: Al Jazeera.