The world has drawn down 440 million barrels of crude and refined products from emergency reserves in just three months, leaving governments close to their tolerance limits for draining stockpiles, according to a June 11 report from S&P Global Energy CERA. The drawdown follows a supply shock triggered by the suspension of most oil trade through the Persian Gulf after US airstrikes on Iran on February 28. Global inventories have plummeted from five-year highs of 8.2 billion barrels to levels that industry experts warn are approaching dangerous territory.
The stock draws have averaged roughly 6 million barrels per day since February, doing most of the work to offset the supply disruption — far more than the estimated 4.6 million b/d of demand destruction in the second quarter compared to 2025 levels, the report finds. The US Strategic Petroleum Reserve has shouldered the bulk of the burden, with over 66 million barrels drawn in the week to June 6 alone, leaving the balance at 349 million barrels — nearly half its capacity. US oil exports have surged 3 million b/d higher since the war began, while gasoline stocks have dropped for 15 straight weeks and diesel stocks have reached critical levels ahead of summer driving season. OECD countries held just 28 days' worth of demand cover in state reserves at the end of the first quarter and 63 days in commercial stocks. Globally, gasoline stocks fell below their 2021-2025 range in May, while European fuel oil supplies have hit historic lows.
"The US we suspect is starting to approach what is described as an 'operational floor,'" said John Evans, an analyst at PVM Oil Associates, explaining that the reserve cannot drop below a minimum 33% of capacity without compromising the caverns where reserves are stored. Paul Simons, a former IEA and US Department of State official, warned that once the current drawdown is complete, the US will be "down to 250 million barrels. That's already way too low for comfort" — enough to cover only two weeks of domestic consumption, well below the preferred 30-day floor. The IEA is halfway through releasing 400 million barrels between its 32 member states, according to the report, amounting to about a fifth of supplies at the organization's disposal.
The speed of the drawdown reflects the severity of the Persian Gulf disruption and the limited alternatives available to replace lost supply. Supplies at Cushing, the physical delivery point for West Texas Intermediate crude, are "weeks" from nearing the floor where the futures settlement mechanism begins to break down, according to Jeff Currie of The Carlyle Group. The IEA warned in April that Europe's total jet fuel reserves could fall below 23 days by August if it can only replace 75% of lost Middle Eastern supply, potentially causing physical shortages at airports. Non-OECD Asian countries face stock-outs even earlier, having held only 22 days' worth of cover in crude inventories. China has eased the crunch by cutting crude imports, but the extent to which it has tapped its estimated 1.3 billion barrels of stockpiles remains unclear.
Political appetite for further destocking looks increasingly uncertain as reserves approach what IEA Executive Director Fatih Birol called the "red zone" in the next one to two months. "Another release would not help the market — it would be viewed as a sign of desperation," Simons said. CERA analysts questioned whether any country, particularly the US, "will be willing to denude themselves of further reserves" given war risks and geopolitical considerations. With a diminishing stock buffer and little clarity on when Persian Gulf shipping can resume, consumption will be forced to shrink — CERA now expects global oil demand to fall at least 2.4 million b/d annually in 2026, with Brent crude averaging $110 per barrel for the full year.