At the end of May, global crude oil inventories will hit 10-year lows. States have used their strategic reserves to limit the impact of the energy crisis caused by the closure of the Strait of Hormuz, but after almost three months of conflict in the Middle East, there would be only 7.6 billion barrels left globally.
Supplies cannot run out completely. Their role is not only to reduce prices in local markets, but above all to guarantee energy, mainly fuel, to the country in the event of a total interruption of supplies. For this reason, many states could begin to limit the use of crude oil supplies, resulting in a further increase in petrol and diesel prices.
Crude oil inventories are at 10-year lows
The data on international oil stocks were released, through an estimate, by the Swiss investment bank UBS. Global crude oil reserve levels have not been this low for a decade. However, it is not only this report that signals an increasingly precarious situation in the international oil market.
Darren Woods, CEO of ExxonMobil, one of the largest US oil companies in the world, also underlined that if we were to reach a minimum level of inventories, a new increase in oil prices would be inevitable. The International Energy Agency, in its May monthly report, also highlighted the rapid decline in reserves, with monthly decreases of:
- 129 million barrels in March;
- 117 million barrels in April.
If the pace of inventory reduction were to continue at this rate, reserve oil would run out in 70 or at most 100 days, depending on estimates.
What are strategic oil reserves for?
Strategic oil supplies, however, cannot really run out. A State cannot completely deprive itself of its stocks, because the role of these stocks is not only to control prices in times of crisis. The supplies exist because a significant part of the basic functioning of the state is based on oil and its derivatives.
Consequently, it is necessary to maintain a minimum level of stocks in case, in an emergency even more serious than the current one, a country remains completely cut off from international oil supplies. At some point, therefore, governments will be forced to stop using their strategic resources to control prices. At that point the effect that the stock releases have had so far would wear off and petrol and diesel prices would start to rise again.
How are Italian stocks doing?
Ocsit, the central Italian storage body that manages an important part of oil stocks, reports that there are currently still around 3 million tonnes of petroleum products in its stocks, with data updated as of May 17th. These storages are divided into:
- 68,394 tons of motor gasoline;
- 180,690 tons of diesel;
- 43,013 tons of jet fuel, aviation fuel;
- 10,690 tons of fuel oil;
- 2,721,374 tonnes of AnyOil, a category indicating inventory not allocated to a specific product.
To these stocks must be added the stocks of private operators, which bring the levels to the minimum required by the EU, of at least 90 days of imports or 61 of consumption. In March the Ministry of the Environment and Energy Security authorized the controlled release of 13.5% of Italian safety stocks to combat the oil crisis.
