We Are Being Warned That Global Oil Inventories Are “Close To Nothing” As We Plunge Into The Most Severe Oil Crisis In History

The only way that we were going to avoid a historic oil crisis was if a diplomatic solution could be found to end the war in the Middle East. Obviously that did not happen. The “Memorandum of Understanding” has completely failed and the U.S. and Iran are hitting one another really hard. The Strait of Hormuz is going to be closed for the foreseeable future, and now it appears that the Bab el-Mandeb Strait will soon be closed as well. Global oil inventories have been falling for months, and now we have reached a stage where we are going to experience some really severe pain.

Iran has attacked at least 9 commercial vessels over the past couple of weeks, and as a result “nobody is willing to move” through the Strait of Hormuz right now…

The security situation in the Strait of Hormuz has returned to a “worse-case scenario” for oil tankers as Iran has repeatedly attacked ships over the past week, the CEO of a maritime risk services firm said.

“We see the reduction of the volume of transits through the Strait of Hormuz and right now crews of vessels are even more concerned than they were before,” said Dimitris Maniatis, CEO of Athens-headquartered Marisks, at a Lloyd’s List Intelligence briefing this week.

“Nobody is willing to move,” Maniatis said.

Click to expand...

This is really bad.

We are truly going to see how dependent the world really is on oil from the Middle East.

Up to this point, we have been okay because there were large commercial oil stockpiles that we could deplete.

But now we are being told that we have “burned through all of the buffers we had”…

Financial Times spoke with energy traders at the end of the week who warned that slowing tanker traffic through the Strait of Hormuz could trigger a more severe supply crunch than the first round of the US-Iran war because emergency reserves and stockpiles around the world that cushioned the earlier disruption have been mostly depleted.

“We’ve burned through all of the buffers we had. Everything,” said one trader. “All of that’s now gone.

Click to expand...

Perhaps some numbers will help people understand the situation that we are facing.

Before the war, we had approximately 400 million barrels of oil in commercial inventories.

At this point, “we have close to nothing”…

Amrita Sen, founder of Energy Aspects, pointed out that heading into the US-Iran war, the global oil market had around 400 million barrels of excess inventories, not including strategic reserves controlled by governments.

“Now we have close to nothing … and market complacency around Hormuz flows is being severely tested,” Sen warned.

Click to expand...

In other words, we are right around the corner from shortages and rationing in some parts of the globe.

Asia will probably be first, and then Europe will follow.

And the outlook for the U.S. is becoming quite dire as well.

In fact, crude oil inventories at Cushing have been hovering around “tank bottoms” recently…

Crude oil inventories at the Cushing, Oklahoma, storage hub have fallen below 20 million barrels in recent weeks, prompting the U.S. Energy Information Administration (EIA) to explain how “tank bottoms” can affect storage operations and market pricing.

According to EIA, storage tanks require a minimum volume of crude oil to remain operational. Known as tank bottoms, this inventory allows pumps and related infrastructure to function properly. Once inventories approach these minimum operating levels, not all stored crude is readily accessible, even though tanks are not technically empty.

Click to expand...

The good news is that we still have some oil in the Strategic Petroleum Reserve, but it is falling fast.

According to the Wall Street Journal, it is currently at the lowest level that we have seen since 1983…

Oil shocks from the war with Iran and the Russia-Ukraine conflict have left the U.S. Strategic Petroleum Reserve at its lowest level since 1983.

Click to expand...

The world has been running an “oil deficit” for months.

Now the Strait of Hormuz is closed again, and the Houthis could soon shut the Bab al-Mandab Strait…

Iran has reportedly instructed Yemen’s Houthi terrorists to prepare to close a critical Red Sea gateway if the United States attacks Iranian power infrastructure, Reuters reported, a threat experts warn could sharply disrupt global shipping even if the group cannot completely seal the waterway.

“This threat should be taken seriously,” Nadwa Al-Dawsari of the Middle East Institute told Fox News Digital. “With recent escalation and U.S. strikes on Iran, Tehran has already signaled that the Bab al-Mandab could become part of its response.”

Three sources told Reuters on Thursday that Iran’s leadership had discussed using the Houthis to shut the Bab el-Mandeb Strait and recently conveyed the request to the group. A source close to the Houthis said missiles and drones had been deployed near the waterway and that the group was awaiting an order to begin attacking shipping.

Click to expand...

The Strait of Hormuz and the Bab al-Mandab Strait have never been shut at the same time.

If that actually happens, energy prices will go absolutely nuts.

Meanwhile, relentless strikes on Russian refineries have caused an insane gasoline shortage in Russia.

Many drivers are waiting multiple hours in line for gasoline, and security forces have been deployed to keep order at gas stations…

Authorities in 13 Russian regions have deployed security forces, including police officers and Rosgvardia personnel, to patrol gas stations as the country faces an escalating domestic fuel crisis following Ukrainian long-range strikes.

The crisis has caused a 35% drop in daily gasoline production to 75,000–80,000 metric tons, far below the typical summer demand of 115,000–120,000 metric tons, leaving half of Russia’s oil refining capacity idle, as reported by The Moscow Times on July 17.

In response to the shortage, local administrations have set strict fuel sales limits ranging from 20 to 40 liters of gasoline per vehicle, leading to long lines where drivers face wait times of at least 2.5 hours.

Click to expand...

The Ukrainians are going to continue sending drones to strike Russia’s refineries, and the Russian people are extremely frustrated.

Some of the lines stretch for miles, and in two cases elderly people actually dropped dead while they were waiting…

For months, the queues at petrol stations across Russia have grown longer.

Some people have slept in cars. Others have pitched tents. A few have ended up brawling over pumps.

Now, two people have died.

An 80-year-old man suffered heart failure while waiting to fill his tank at a petrol station in the town of Lysva in Perm Krai, while a 75-year-old man died while waiting to refuel in Petrozavodsk.

Click to expand...

The Russians are normally one of the largest oil exporters in the world.

But now they have been forced to beg India for gasoline…

Moscow has approached Indian refineries for more gasoline imports amid an acute fuel shortage, according to industry sources cited by Reuters.

Russia, the world’s third-largest oil producer, has reportedly requested gasoline imports from India and Kazakhstan in June amid a sprawling fuel crisis spurred by Ukrainian strikes, with nationwide fuel rationing reported.

Reuters, in its Thursday report, said Russian oil giants Rosneft, Gazprom Neft and Lukoil have approached their Indian counterparts to raise imports, with the outlet’s source adding that deliveries are likely to be routed through traders.

Click to expand...

This is another reason why this oil crisis is going to be so severe.

The worst gasoline shortages in the world at this moment are in one of the largest oil producers in the world.

Meanwhile, the war in the Middle East just continues to escalate.

We had a very large cushion to work with at the beginning of the war, but now it has been almost entirely depleted.

This is where things get very “interesting”, and the vast majority of the population has no idea what is coming.

Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.



About the Author: Michael Snyder’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com. He has also written nine other books that are available on Amazon.com including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.

The post We Are Being Warned That Global Oil Inventories Are “Close To Nothing” As We Plunge Into The Most Severe Oil Crisis In History appeared first on The Economic Collapse.

Continue reading...

[ H/T The Economic Collapse Blog ]