WANA (Jun 07) – While Donald Trump asserts that massive volumes of oil are being successfully routed through the Strait of Hormuz—without which, he claims, crude would skyrocket to $300 a barrel—the largest bank in his own country is warning that global oil inventories are rapidly approaching a critical tipping point.

 

Data from JPMorgan Chase, the largest bank in the United States, reveals that global oil inventories are nearing their absolute lowest operational limits. Although the year commenced with global stockpiles sitting at 8.4 billion barrels, the American banking giant projects that this figure will plummet to 7.5 billion barrels by late July.

 

U.S. Strategic Reserves Hit Historical Lows

This warning comes just over three weeks after the conclusion of the largest-ever release from the U.S. Strategic Petroleum Reserve (SPR).

 

Two weeks ago, U.S. strategic stockpiles sank to their lowest level in 43 years. Last week, an additional 8 million barrels were drawn down, prompting Javier Blas, Chief Energy Correspondent at Bloomberg, to note that U.S. strategic reserve levels will drop even lower this week than they were during the Biden administration.

 

The current drawdown mirrors the historic releases initiated at the start of the Ukraine war—a policy for which Donald Trump frequently criticized Joe Biden.

 

Diverging Market Outlooks: Glut vs. Crisis

Energy officials and industry executives remain sharply divided on the true state of the market. Fatih Birol, Director of the International Energy Agency (IEA), maintains an optimistic view, stating that there is currently plenty of oil in the market and framing the primary issue as a logistical and transport challenge rather than a supply shortage.

 

However, Mark Wirth, CEO of Chevron, expressed a starkly different view just two days ago, warning that global oil inventories are steadily depleting and will soon hit the floor, making June and July critical months.

 

JPMorgan’s data supports this more pessimistic outlook, showing that crude inventories have aggressively declined every single month, on track to shrink by 900 million to 1 billion barrels by the summer.

 

The Hormuz Dilemma and the $200 Barrel Scenario

This rapid depletion poses a severe challenge to international watchdogs. Institutions like the IEA have long relied on emergency stock releases as a buffer to counter potential supply deficits caused by a disruption or closure of the Strait of Hormuz.

 

Oil market analysts now warn that the market has entered a dangerous phase where simply releasing reserves will no longer suffice. Bob McNally, a former White House energy advisor, stated that if the Strait of Hormuz remains blocked, oil prices could surge to $200 per barrel this summer.

 

The Brookings Institution, one of the world’s oldest and most prestigious think tanks, echoed this warning in a recent analysis:

 

“The longer the Strait of Hormuz remains closed, the faster emergency reserves will be depleted. Physical oil shortages will become starkly visible, rapidly driving the likelihood of a price spike from the $120–$150 range toward grim $200-per-barrel scenarios.”