“America's oil supplies are far from prepared for the U.S.-Iran ceasefire to end.
Commercial inventories in the U.S. rose 3 million barrels in the week ended last Friday, according to the Energy Department, the first uptick after 10 consecutive weeks of drawdowns.
Still, stockpiles are so low that the central U.S. storage hub in Cushing, Okla., has reached operational limits that would make withdrawing more crude challenging. Meanwhile, inventories in the government-run Strategic Petroleum Reserve, a system of salt caverns on the Gulf Coast, keep falling and sit at the lowest level since 1983.
Global oil prices retreated to prewar levels and tanker traffic through the Strait of Hormuz gradually resumed after President Trump announced a temporary pause in the fighting in mid-June -- but crude stockpiles will take much longer to restore.
Now that Trump has declared the ceasefire over, the situation risks becoming more dire. "The worst fears of the oil market could still be realized later this year as we get to the minimum operating levels," said Andy Lipow, president of Lipow Oil Associates in Houston.
"The only way to get prices back in balance is to have prices go up, such that you would have demand destruction. Once the shelf is bare, there's nowhere to turn," he said.
Energy executives and analysts aren't yet predicting a repeat of the oil shock that sent prices above $100 a barrel this spring, but they say another closure of the Hormuz -- through which 20% of the world's petroleum typically passes -- could threaten America's energy security.
If the U.S. is forced to further draw down its stockpiles, that would potentially limit its ability to respond to new oil disruptions on the world's stage or natural disasters such as hurricanes that can damage fuel supply chains. It could also push fuel prices up again to a level that causes consumers and other buyers to pull back.
On Thursday, front month Nymex crude for August delivery lost $1.44, or 2%, to $72.08 a barrel. U.S. oil is up 3.7% this month and up 25% year to date.
The U.S. and other countries are expected to take months, or even years, to replenish their stockpiles. One of the shorter-term challenges to refilling the coffers is the transit time for ocean-faring vessels to sail from the Middle East to customers around the world.
Two factors working in the U.S.'s favor: crude prices that have fallen more than 30% from their April highs and an unexpected shift in global energy flows.
China and other big buyers are, for now, proceeding without using as much oil, freeing up supplies on the open market.
The U.S. has slowed releases of oil from its Strategic Petroleum Reserve as the inventories have declined and prices have tumbled.
The Energy Department awarded only about 500,000 barrels of the 40 million it had authorized for the most recent release.
That decision has helped to slow the pace of U.S. crude exports, which soared to records in April after Trump declared America's energy market open for business.
South Korea, the Netherlands, Taiwan and other countries turned to the U.S. for barrels they couldn't get from the Middle East.
Exports are likely to end July below 4 million barrels a day, a level last seen in February, before the start of the conflict, according to market- intelligence firm Kpler.
But the supply crunch hasn't yet eased in the market for petroleum products, such as diesel and gasoline.
U.S. exports of those fuels are still hovering near record levels, while American refineries run full-tilt to replace supplies in Asia, Europe and Latin America, Kpler data show.
On the Gulf Coast, the central hub of U.S. oil refining and fuel exports, stockpiles of gasoline are 7.2 million barrels lower than normal for this time of year and well below the five-year average, according to energy-data and analytics provider OPIS, a Dow Jones company.
"We started the year well above that [five-year] band," said Denton Cinquegrana, chief oil analyst at OPIS.
That partially explains "why gasoline remains strong despite the fact there's plenty of crude oil that appears to be available in the open market."
The national average for a gallon of regular gasoline was $3.85 Thursday, up from $2.98 at the start of the conflict.
Although jet-fuel supplies are stabilizing, American diesel inventories are at the lowest levels since the early 2000s. Exports are poised to climb to near-record levels in July, according to Kpler, partly thanks to increased appetite from Brazil.
Fuel markets are currently tighter than oil markets because China and other countries around the world have cut back on refining. China this week said it would lift a ban on product exports, meaning its refineries will soon ramp up production.
The pinch has been further heightened by Ukraine's drone strikes on Russian refineries, which have taken out a substantial portion of the country's capacity to make fuel and export it.
Russia banned diesel exports on Wednesday to keep domestic supplies from sinking further.
It also recently imported some fuel supplies from India -- one of Russia's biggest oil buyers -- in a rare move that underscores the tightness in the products market. Brazil had also been a big buyer of its diesel.
"The issue isn't in the crude market, the issue is in the products market, and it's finally showing itself here," said Matt Smith, an analyst at Kpler.
"We've lost, over the past four months, 10 million barrels a day out of the Middle East, and yet we're at $70 a barrel. The reason is largely offsetting that loss of oil production has been a pullback in refinery runs."” [1]
1. U.S. Oil Supply Is Dangerously Low --- Situation became riskier after Trump ended ceasefire with Iran. Eaton, Collin. Wall Street Journal, Eastern edition; New York, N.Y.. 10 July 2026: B1.
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