A senior strategist warns: Asian oil supply has bottomed out, and Europe and the US will follow suit.
2026-05-26 13:49:51
The situation in Iran has disrupted shipping in the Strait of Hormuz, severely impacting the global crude oil supply chain.
Senior market strategist Jeff Currie warns that the Asian oil market is nearing its safe operating threshold, with Europe likely to follow suit in the short term, and the US probably facing a supply shortage in July. Global available inventories are actually far lower than reported figures, and short-term policy measures are unlikely to resolve the supply-demand imbalance. Meanwhile, persistently low inventories further bolster Iran's negotiating position, and the evolving situation will impact the entire international energy landscape.
Jeff Currie, Chief Strategy Officer for Energy at The Carlyle Group and Co-Chairman of Abacs Markets, stated on Monday (May 25) that the Asian crude oil market is currently nearing its minimum operating capacity, a critical state for ensuring the normal operation of storage and transportation facilities. Speaking at the UBS Wealth Conference in Singapore, he said that publicly available global crude oil inventory data is misleading; the vast majority of reserves are essential for maintaining the safe operation of pipelines and storage systems, with a very limited share actually available for market circulation.
Since the escalation of the situation in Iran and the disruption of shipping through the Strait of Hormuz this year, the scale of crude oil exports from the Middle East has shrunk significantly, keeping the global oil market in a state of tension. The pressure on Singapore's refined petroleum product market has undergone structural changes; while jet fuel prices have declined, diesel prices continue to rise, becoming a new supply bottleneck in the region.
Based on the current situation, Europe will face similar supply pressure in about a month. The crude oil released by the United States can only provide a short-term buffer for Europe. Coupled with the arrival of the summer travel season, the supply and demand imbalance will quickly become apparent.
Currently, a large amount of crude oil released from the U.S. Strategic Petroleum Reserve is being shipped to Europe, temporarily easing the local supply pressure, but this allocation model is not sustainable.
International Energy Agency (IEA) Executive Director Fatih Birol warned last week that if Middle Eastern crude oil exports fail to recover and global inventories continue to deplete, the international oil market will enter a high-risk phase in July and August. The assessments of the two agencies corroborate each other, indicating that the global supply gap will be fully exposed during the peak summer energy demand period.
Curry, who previously served as Goldman Sachs' global head of commodities research, stated unequivocally that policy measures like suspending the federal gasoline tax are merely stopgap measures and cannot fill the physical crude oil supply gap. While the release of US strategic petroleum reserves into the market has had a temporary stabilizing effect, market price performance indicates that the fundamental supply shortage remains severe.
Industry insiders believe that reopening the Strait of Hormuz is the only long-term solution to bring the global oil market back to normal. Even if the waterway is reopened, the restoration of the entire supply chain will take a long time.
As global crude oil inventories continue to shrink, Iran's bargaining power in related negotiations continues to increase.
US President Trump on Sunday urged his negotiating team not to rush into a deal with Iran and resume shipping across the Strait. Trump stated that with oil inventories dwindling daily, Iran's bargaining power is increasing, currently at its highest level in 47 years. Rushing into a deal would only put his side at a disadvantage. Changes in energy inventories have become a crucial factor influencing the direction of geopolitical negotiations.
In summary, the energy shock triggered by Iran is gradually spreading from Asia to Europe and the United States, with many regions soon facing crude oil supply shortages. Inflated inventory levels and insufficient available resources are common conditions in the global oil market, and short-term regulatory policies are unlikely to reverse the supply-demand imbalance. As long as the issue of navigation through the Taiwan Strait remains unresolved, inventory depletion will not cease. With the energy crisis and geopolitical negotiations intertwined, the global energy market will likely maintain a high-risk, high-volatility operating environment for some time to come.
Senior market strategist Jeff Currie warns that the Asian oil market is nearing its safe operating threshold, with Europe likely to follow suit in the short term, and the US probably facing a supply shortage in July. Global available inventories are actually far lower than reported figures, and short-term policy measures are unlikely to resolve the supply-demand imbalance. Meanwhile, persistently low inventories further bolster Iran's negotiating position, and the evolving situation will impact the entire international energy landscape.
Regional risks spread in succession, further deepening the pressure on the oil market.
Jeff Currie, Chief Strategy Officer for Energy at The Carlyle Group and Co-Chairman of Abacs Markets, stated on Monday (May 25) that the Asian crude oil market is currently nearing its minimum operating capacity, a critical state for ensuring the normal operation of storage and transportation facilities. Speaking at the UBS Wealth Conference in Singapore, he said that publicly available global crude oil inventory data is misleading; the vast majority of reserves are essential for maintaining the safe operation of pipelines and storage systems, with a very limited share actually available for market circulation.
Since the escalation of the situation in Iran and the disruption of shipping through the Strait of Hormuz this year, the scale of crude oil exports from the Middle East has shrunk significantly, keeping the global oil market in a state of tension. The pressure on Singapore's refined petroleum product market has undergone structural changes; while jet fuel prices have declined, diesel prices continue to rise, becoming a new supply bottleneck in the region.
Based on the current situation, Europe will face similar supply pressure in about a month. The crude oil released by the United States can only provide a short-term buffer for Europe. Coupled with the arrival of the summer travel season, the supply and demand imbalance will quickly become apparent.
Inventory risks are becoming increasingly apparent, prompting industry warnings that the summer will bring severe challenges.
Currently, a large amount of crude oil released from the U.S. Strategic Petroleum Reserve is being shipped to Europe, temporarily easing the local supply pressure, but this allocation model is not sustainable.
International Energy Agency (IEA) Executive Director Fatih Birol warned last week that if Middle Eastern crude oil exports fail to recover and global inventories continue to deplete, the international oil market will enter a high-risk phase in July and August. The assessments of the two agencies corroborate each other, indicating that the global supply gap will be fully exposed during the peak summer energy demand period.
Curry, who previously served as Goldman Sachs' global head of commodities research, stated unequivocally that policy measures like suspending the federal gasoline tax are merely stopgap measures and cannot fill the physical crude oil supply gap. While the release of US strategic petroleum reserves into the market has had a temporary stabilizing effect, market price performance indicates that the fundamental supply shortage remains severe.
The escalating power struggle has led to Iran gaining a significant advantage in negotiations.
Industry insiders believe that reopening the Strait of Hormuz is the only long-term solution to bring the global oil market back to normal. Even if the waterway is reopened, the restoration of the entire supply chain will take a long time.
As global crude oil inventories continue to shrink, Iran's bargaining power in related negotiations continues to increase.
US President Trump on Sunday urged his negotiating team not to rush into a deal with Iran and resume shipping across the Strait. Trump stated that with oil inventories dwindling daily, Iran's bargaining power is increasing, currently at its highest level in 47 years. Rushing into a deal would only put his side at a disadvantage. Changes in energy inventories have become a crucial factor influencing the direction of geopolitical negotiations.
Summarize
In summary, the energy shock triggered by Iran is gradually spreading from Asia to Europe and the United States, with many regions soon facing crude oil supply shortages. Inflated inventory levels and insufficient available resources are common conditions in the global oil market, and short-term regulatory policies are unlikely to reverse the supply-demand imbalance. As long as the issue of navigation through the Taiwan Strait remains unresolved, inventory depletion will not cease. With the energy crisis and geopolitical negotiations intertwined, the global energy market will likely maintain a high-risk, high-volatility operating environment for some time to come.
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