Oil prices have dropped in recent weeks. Yet senior executives at the largest energy companies continue to issue stark alerts about vanishing stockpiles. Their message carries weight. These leaders oversee operations spanning production to refining across continents. And the data backs their concern.
Since late February, when conflict closed the Strait of Hormuz to most shipping, the world has lost access to roughly one-fifth of daily crude flows. Nations responded by pulling heavily from tanks, caverns and strategic reserves. The pace has been relentless. Global observed inventories drew at an average 3.8 million barrels per day since the war began, accelerating to about 4.6 million barrels per day in May alone, according to the Reuters report on the International Energy Agency’s latest assessment.
That drawdown shows no quick reversal. At the key Cushing, Oklahoma hub, stocks have fallen to 21 million barrels. The U.S. Strategic Petroleum Reserve sits at its lowest point since 1983. Executives from Exxon Mobil and Chevron have repeatedly highlighted the risk. “We’re approaching unheard of inventory levels,” said Neil Chapman, Exxon Mobil’s senior vice president, during a recent conference. “I mean really, really low levels. You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, then you’ll see price shoot up.”
His warning aligns with comments from Chevron CEO Mike Wirth. Both leaders stress that markets cannot flip like a switch. Reopening the strait will not instantly restore full flows. Tankers must reposition. Production ramp-ups take months. Processing and distribution add further delays. So inventories serve as the immediate buffer. Once they approach operational minimums, prices must rise to ration demand and incentivize supply.
The U.S. Energy Information Administration painted a similar picture in its June Short-Term Energy Outlook. Global oil inventories are forecast to fall by an average 6.3 million barrels per day in the second quarter of 2026 and 7.6 million barrels per day in the third. OECD inventories could hit their lowest level since 2003, measured in days of forward cover at just 50 by year-end. Brent crude is expected to average $105 per barrel in June and July before easing as flows gradually resume. The agency assumes shipments through the strait restart in the third quarter but reach pre-conflict volumes only in early 2027.
Recent weekly data reinforces the trend. U.S. crude inventories declined for the tenth consecutive week, reaching over a 20-year low in some measures, the Reuters noted. Gasoline stocks have also dropped sharply. Refineries ran harder to meet summer fuel needs, yet the underlying crude tightness persists.
Industry voices outside the majors echo the alarm. Wil VanLoh of Quantum Capital Group told audiences it “is going to get ugly.” These comments, first reported in The Wall Street Journal, came as executives briefed the Trump administration on risks of a price surge in mid-to-late June. One participant described the situation as “hitting tank bottom.”
The Motley Fool article from June 18 captured the disconnect between market perception and physical reality. Prices fell on news of a potential U.S.-Iran agreement to reopen the strait. Iranian tankers began moving. Yet the piece argued this optimism overlooks the time required to rebuild depleted stocks. Demand, already strained, will not simply normalize. “Exxon and Chevron have both warned that higher oil prices could be on the way as the on-the-ground reality of the energy sector becomes more important than news flow from the conflict,” the publication wrote.
Such warnings matter for more than traders. Low inventories raise the odds of volatility. Summer driving season adds pressure on gasoline. Any refinery hiccup or unexpected demand spike could amplify moves. Politico reported in early June that industry models showed a potential 50 percent or greater jump in oil costs if draws continue unchecked. Gasoline prices, already up more than $1 per gallon from pre-conflict levels, illustrate the pass-through.
Still, the outlook shifts later. The IEA expects a significant supply surplus to emerge in 2027 once Gulf production fully recovers. Supply could exceed demand by around 5 million barrels per day, offering a chance to rebuild stocks or expand strategic reserves. That longer-term view, however, does little to ease near-term tightness. Inventories may plunge further before the balance tips.
Analysts at major banks have adjusted forecasts accordingly. Morgan Stanley set its 2026 WTI assumption near $88 per barrel, with Brent at $97, according to coverage in AOL. These figures sit above recent spot levels but reflect the inventory-driven floor. JPMorgan earlier flagged the risk of commercial stocks in developed nations reaching “operational stress levels” by early June.
Executives at integrated majors hold a unique vantage. Their businesses touch every link in the chain. They see storage data, tanker movements, refinery throughput and end-user demand in real time. When both Exxon and Chevron leadership sound the same note over months, markets dismiss it at their peril. The recent Motley Fool analysis highlighted that these companies offer investors durable exposure precisely because they understand the physical constraints others overlook.
Geopolitics adds another layer. Even if a deal holds, tanker insurance, routing and port capacity will not snap back overnight. Lingering risks in the region could keep premiums elevated and flows cautious. The Washington Post detailed how these warnings complicate administration efforts to manage inflation already elevated by energy costs.
Fortune captured the urgency in late May. Bosses warned prices “will soar in a matter of weeks” as inventories near “really, really low levels.” Chapman’s remarks, also covered by CNBC, underscored that once minimum operating levels are breached, the only direction for prices is up. No easy substitutes exist at scale.
Data from the EIA shows U.S. crude stocks fell 8.26 million barrels in the week ended June 12 to 418.2 million barrels. Cushing dropped another 1.6 million. These repeated draws have erased earlier builds. What looked like a glut in 2025 has flipped into a deficit that inventories must absorb.
Yet the story is not uniform. Some regions built stocks earlier when prices were lower. China absorbed much of the prior surplus. That capacity is now largely full. Future draws will bite harder. The Forbes analysis of gasoline inventories noted they are falling at a record pace even if absolute levels have not yet reached crisis territory. The trajectory, not the snapshot, signals trouble.
So what comes next? Short-term price support seems probable. Higher costs could eventually curb demand and bring marginal supply online. But that process takes quarters. In the interim, thin buffers leave the market exposed. Refiners may bid aggressively for available barrels. Exporters outside the Gulf will maximize shipments.
Longer term the IEA and EIA both see relief. A 2027 surplus would allow rebuilding. Countries may review strategic reserve policies in light of this shock. The experience demonstrates how quickly assumptions of abundance can evaporate when key chokepoints close.
Oil company leaders have spent months preparing governments and investors for this moment. Their consistency across public statements and private briefings suggests the physical market reality diverges from headline optimism. Prices may have softened on diplomatic news. The inventories tell a different story. They are running critically low. And that fact will assert itself.
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