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Global Oil Buffers Erode as Inventory Draws Accelerate Amid Middle East Supply Disruptions, Kpler Says

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Global oil markets are rapidly losing the inventory buffers that initially cushioned the impact of disruptions to Middle Eastern crude supplies, raising the risk of sharper stock draws and tighter fuel markets through the summer, Kpler analyst Yui Torikata said in a blog post on Friday.

The report said surplus barrels, floating storage, and oil already in transit helped absorb the early shock from disruptions linked to the Strait of Hormuz, but those buffers are now largely depleted, leaving commercial inventories as the "final line of defense."

Analysts estimate the global crude market swung from a surplus earlier this year into a deficit of roughly 2.6 million barrels per day in May, driven by lower Middle Eastern production and refinery disruptions across Asia. However, the full scale of the deficit has not yet appeared in observable inventory data, suggesting additional drawdowns from underground storage or deeper refinery run cuts, particularly in China.

Global onshore crude inventories have fallen by roughly 130 million barrels from post-pandemic highs to around 3.6 billion barrels, while oil-on-water volumes also declined sharply following the initial supply shock.

Japan and South Korea were identified as among the most exposed consumers. Japan has drawn more than 70 million barrels from inventories since the conflict began and is now relying heavily on stockpiles to sustain refinery operations. South Korea has also reduced refinery throughput and may face further inventory draws despite planned strategic reserve releases.

The report said the market is also facing a growing quality mismatch as refiners struggle to replace medium-sour Middle Eastern crude with lighter US grades. While US exports have surged to record highs, lighter crude yields lower levels of diesel and jet fuel, creating structural shortages of middle distillates.

Analysts estimate global gasoil shortages could exceed 500,000 barrels per day in June, while jet fuel deficits may surpass 450,000 barrels per day.

Europe has increasingly turned to US crude imports to offset reduced Middle Eastern flows, but the shift toward lighter grades is expected to strain refinery economics and increase reliance on imported diesel and jet fuel.

The report said oil futures curves, rather than outright crude prices, may provide the clearest signal of tightening physical supply conditions. Analysts expect deeper backwardation to emerge as inventories continue to decline, even as flat prices are restrained by fears of demand destruction and the possibility that a ceasefire will ease supply disruptions.

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