U.S. commercial crude oil inventories are about 10% below their five-year average for this time of the year as the Israel-Iran conflict continues to rage on. For the week ended June 13, oil inventories dropped by 11.5 million barrels to 420.9 million barrels, much greater than the analyst estimate for a decline of 1.6 million barrels. In addition, gasoline inventories rose by 200,000 barrels to 230 million barrels, below the estimate for a 400,000 barrel rise.
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“Robust exports, lower imports and crude inputs just shy of 17 million barrels per day have conspired to cause a massive draw to US crude inventories,” said Kpler Americas lead oil analyst Matt Smith.
Israel-Iran Conflict Threatens Oil Supply Chains
The greater-than-expected inventory drop comes as the oil supply chain faces threats from the chaos in the Middle East. Iran holds significant influence over the Strait of Hormuz, a vital passageway responsible for about 20% of global oil shipments. The Strait remains open, although some shipping companies have chosen to avoid it anyway, potentially leading to delays and rising transportation costs. Crude oil futures have risen by nearly 10% during the past five days.
The summer season is also set to kick off as Americans prepare to increase their usage of gasoline-powered vehicles.
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