When do we “run out” of oil stockpiles?

Investing.com -- In a note to clients on Thursday, Citi analysts said the U.S.-Iran conflict and disruptions to the Strait of Hormuz have driven global observed inventory draws of roughly 3 million barrels per day, or 519 million barrels, between February and August 2026.

Projecting those draws forward, the bank believes OECD stockpiles could fall to about 70 days of cover as late as the end of 2027, with ex-China stocks reaching that level by mid-2028 and global stocks by the first quarter of 2029.

Citi noted that 70 days of cover was the level hit during the second oil shock of the 1970s and 1980s, when energy spending reached around 8% of GDP, which is equivalent to all-in prices above $200 a barrel, against roughly $120 currently.

However, the bank cautioned that the macro picture masks more immediate strains. "Specific refined products (especially diesel) are already facing distress now, which could worsen further, meaning more localized, product-specific crises earlier than these projections would suggest," Citi wrote.

Brent has risen above $93 a barrel and WTI above $86, up from early August lows of $80 and $75, as markets grow more pessimistic on a quick deal. U.S. wholesale diesel prices have soared to more than $100 a barrel above WTI, while the weighted refinery margin has jumped around 350% this year to $33.

Citi's base case still assumes a deal and reopening in the fourth quarter, with Brent returning to the $60s in 2027.

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