OECD Oil Stocks Fall to Lowest Level Since 1990

The conflict in Iran has triggered a sharp decline in oil inventories across the Organization for Economic Cooperation and Development (OECD), which fell in May to their lowest level since 1990. According to the International Energy Agency (IEA), global oil stocks had declined by 252 million barrels by June, with much of the drawdown offsetting supply disruptions from the Persian Gulf.

IEA Executive Director Fatih Birol, speaking to Germany's Tagesschau, described the situation as the greatest energy crisis in history. The agency coordinated the release of 400 million barrels from strategic reserves and, following a framework agreement between the US and Iran, called for the unconditional reopening of the Strait of Hormuz.

At the same time, the IEA lowered its forecast for global oil demand, which it now expects to decline by 1.1 million barrels per day because of high prices and disrupted supply chains. If confirmed, this would mark the sharpest drop in demand since the COVID-19 pandemic in 2020.

The situation has also been compounded by falling Russian production. Russia's oil output declined by 5% in May to 8.7 million barrels per day, largely because of Ukrainian long-range drone strikes on energy infrastructure deep inside Russian territory.

Although Moscow's oil export revenues rose 65% year on year on the back of higher prices, the government has restricted gasoline exports and banned exports of jet fuel amid concerns over domestic fuel shortages.

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