Strait of Hormuz Disruptions Reduce Global Refined Fuel Inventories to 45 Days of Demand

Disruptions in the Strait of Hormuz are choking one of the world's most critical energy shipping routes, leading to emerging shortages in specific refined products including jet fuel, petrochemical feedstocks like naphtha, and liquefied petroleum gas used to make plastics and chemicals. S.

and Israel conducted attacks on Iran in late February, triggering supply disruptions that have pushed crude oil futures over 50% higher.

U.S. West Texas Intermediate crude was trading around $104 per barrel. Goldman Sachs analysts wrote a note on Monday warning that the speed of depletion and supply losses in some regions and products are concerning, with easily accessible refined products buffers approaching very low levels fast.

Global commercial refined product stocks have fallen to about 45 days of demand, according to Goldman Sachs estimates, down from around 50 days of demand before the recent disruption. Total global oil stocks are roughly 101 days of demand. Inventories of naphtha have fallen since late February, including a 72% drop in UAE Fujairah storage and a 37% fall in northwest Europe's Amsterdam-Rotterdam-Antwerp hub storage.

Asia outside China and parts of Europe are particularly exposed to the shortages in refined fuels. South Africa, India, Thailand, and Taiwan are among the more vulnerable markets to shortages, Goldman Sachs analysts wrote. The world's biggest carriers have canceled flights due to tightening jet fuel supplies.

Goldman Sachs estimates that European commercial jet fuel inventories, excluding government emergency reserves, could fall below the International Energy Agency's critical 23-day threshold as soon as June. Goldman Sachs analysts wrote that even if Hormuz flows started recovering soon, any full normalization of deliveries would take at least several weeks.

Insider reported that refining bottlenecks and trade frictions are driving these shortages despite ample crude supply.

The global energy markets have been thrown into disarray following the attacks, but overall oil inventories remain above critical levels. Shortages are emerging in specific refined products, especially jet fuel, petrochemical feedstocks like naphtha, and liquefied petroleum gas used to make plastics and chemicals, as refining constraints, trade disruptions, and export restrictions create bottlenecks.

Even where crude oil is available, it cannot always be converted into usable fuel quickly enough, meaning surpluses in one location do not easily offset shortages elsewhere.

Nowhere is this more evident than in aviation, where carriers have canceled flights amid the tightening supplies.

Inventories of naphtha, a critical input for plastics and industrial chemicals, have fallen since late February. The UAE Fujairah storage drop of 72% and the 37% fall in the Amsterdam-Rotterdam-Antwerp hub underscore the rapid declines. Asia outside China and parts of Europe appear particularly exposed, with South Africa, India, Thailand, and Taiwan listed as more vulnerable markets.

The disruptions through the Strait of Hormuz continue to pressure global supply chains.

Brent was at $113 per barrel and West Texas Intermediate at $104 per barrel early Tuesday. S. and Israeli attacks on Iran in late February set off the chain of events leading to these shortages.