US Oil Inventories Plunge as Cushing Stocks Reach Near‑Operational Lows

U.S. oil inventories have taken a sharp hit, with the key Cushing, Oklahoma hub – the benchmark for West Texas Intermediate – seeing stocks drop from 33 million barrels just under two months ago to roughly 24.5 million barrels today, approaching the 20‑million‑barrel operational floor. Meanwhile, the Strategic Petroleum Reserve has been depleted by about 50 million barrels since the start of the Iran conflict, falling 12 % to 365 million barrels, the lowest level since April 2024.

Industry leaders warn that the trend could trigger a rapid price surge. Exxon Senior Vice President Neil Chapman cautioned that once inventory levels hit their historic lows, “there’s only one way to go.” Chevron’s CEO Mike Wirth echoed this sentiment, noting that the market’s shock absorbers are being exhausted and that physical prices are likely to climb as pressures build into June and July.

Analysts from JPMorgan and Capital Economics project that commercial oil inventories in developed economies could reach operational stress levels by early June and hit critically low thresholds by the end of the month. The combination of a contested Strait of Hormuz, ongoing U.S. missile strikes on blockade runners, and Iran’s continued attacks on shipping has kept global oil demand high while supply routes remain constrained.

Despite early predictions of a jump to $200 a barrel when the strait first closed, large releases from strategic reserves and temporary sanctions relief have kept prices from reaching those peaks. However, with reserves dwindling, market participants are bracing for a potential rebound that could reshape pricing dynamics in the coming weeks.