Oil Inventories Plunge at Record Pace

Global oil inventories are falling at a record pace of about 4 million barrels a day in March and April as the Iran war disrupts Middle East supplies, according to the International Energy Agency , which warned Wednesday that oil price spikes are likely over the peak summer demand period as rapidly depleting inventories pile more pressure on the market .

Global observed oil inventories drew by 129 million barrels in March and by a further 117 million barrels in April, according to preliminary IEA data . The market will remain "severely undersupplied" until October even if the conflict ends next month , the Paris-based agency said in its May oil market report. According to market data, WTI crude traded at $71.50 per barrel on Tuesday, up 0.6 percent, while Brent crude stood at $75.20 per barrel, gaining 0.5 percent.

The IEA's oil market report for May noted that global oil supply declined by a further 1.8 million barrels per day in April, taking total losses to 12.8 million barrels per day since the U.S.-Israeli war with Iran began on February 28 . According to the May 2026 Oil Market Report by the International Energy Agency, global oil supply is projected to fall by 3.9 million barrels per day across 2026, with approximately 10.5 million barrels per day of Gulf oil production currently offline .

Can Refineries Keep Up With Demand?

Refinery attacks tied to the wars in Iran and Ukraine have knocked out nearly 9 percent of global oil refining capacity in recent months, deepening a fuel supply crunch and likely delaying recovery by months after fighting ends, Reuters reported Tuesday . The damage extends far beyond the Middle East conflict zone.

Reuters calculations show Ukrainian drone attacks aimed at disrupting Moscow's war machine have forced about 700,000 barrels per day in Russian crude processing capacity offline between January and May at 16 sites . Refinery crude throughputs are forecast to plunge by 4.5 million barrels per day in the second quarter of 2026 to 78.7 million barrels per day, and by 1.6 million barrels per day to 82.3 million barrels per day for 2026 as a whole, as operators contend with infrastructure damage, export restrictions and lower feedstock availability , the IEA said.

EU diesel prices at the pump hit a record 2.11 euros per litre in April, according to European Commission data, reflecting lost Gulf supply and halted intake from Russia . Europe could face jet fuel shortages as early as June if Gulf supplies are not fully replaced, the International Energy Agency has said .

Is Russia Benefiting From the Crisis?

While production has fallen, Russia's oil revenues are surging thanks to elevated prices. According to the International Energy Agency monthly market report for May, Russia's oil export revenues clocked in at $19.18 billion in April, good for a modest $180 million increase from March but a massive jump of $6.28 billion compared to April 2025 .

The increase in oil revenues came despite total output falling by 460,000 barrels per day to 8.8 million barrels per day, while total exports declined by 90,000 barrels per day , OilPrice.com reported. High prices are more than offsetting production losses for Moscow, even as Ukrainian attacks continue to target Russian refining infrastructure.

What About U.S. Inventories?

Domestic stockpiles are also under pressure. Crude oil inventories in the United States decreased by 4.3 million barrels during the week ending May 8, according to new data from the U.S. Energy Information Administration released on Wednesday . The decrease brings commercial stockpiles to 452.9 million barrels, according to government data, which is 0.3 percent below the five-year average for this time of year .

According to weekly EIA data, crude oil inventories in the United States have decreased by a total 3.3 million barrels over the last four weeks , extending a drawdown that began in late winter. Gasoline and distillate stocks are also tightening significantly as the summer driving season approaches.

Will Natural Gas Markets Face Similar Pressure?

The natural gas sector is showing its own signs of stress, though the dynamics differ from crude. Early summer-like heat and flattened production could soon result in a South Central storage deficit relative to historical norms, according to Natural Gas Intel, and an expected rebound in Gulf Coast LNG demand could amplify challenges for regional operators to bolster underground inventories .

New York Mercantile Exchange natural gas futures were up slightly through midday as traders looked ahead to a cooling season colored by lower supply and healthy power burns , Natural Gas Intel reported Tuesday. According to market data, Henry Hub natural gas traded at $3.25 per million BTU on Tuesday, down 2.4 percent.

Natural gas-fired generation is projected to hold nearly flat in 2026 before accelerating in 2027, while solar captures power market share from coal in the near term, according to updated U.S. Energy Information Administration projections released Tuesday . The shift reflects growing data center demand for reliable baseload power, even as renewable capacity expands.

What Changed This Week

The IEA's stark warning about record-pace inventory drawdowns marks a significant escalation in the agency's assessment of the global oil crisis. The combination of ongoing supply disruptions in the Middle East, Ukrainian attacks on Russian refineries, and tightening U.S. inventories is creating a perfect storm for summer fuel markets. Meanwhile, natural gas storage in key U.S. regions is flirting with deficit territory just as cooling season approaches, adding another layer of complexity to the energy outlook.

What to Watch

The IEA projects global oil inventories will fall by an average of 8.5 million barrels per day during the second quarter of 2026, with the steepest draws expected in May and June. Traders will be closely monitoring weekly EIA inventory reports, with the next release scheduled for May 20. Any progress toward reopening the Strait of Hormuz—which has seen traffic plunge from 20 million barrels per day before the war to just over 2 million barrels per day in March—could provide relief, though the IEA assumes flows won't gradually resume until June at the earliest. On the natural gas front, watch for the EIA's weekly storage reports through May and June to gauge whether South Central inventories slip into deficit, which could support higher prices heading into peak summer cooling demand.