Goldman Sachs says global oil stockpiles falling at record pace as Hormuz flows hit 5%

⦿ Executive Snapshot

What: Global oil stockpiles are declining at a record pace of 8.7 million barrels per day due to reduced flows through the Strait of Hormuz.
Who: Goldman Sachs, oil market participants, Chinese refineries, European airlines.
Why it matters: The unprecedented drawdown in oil inventories signals severe supply constraints, impacting global oil prices and economic activity.

Global visible crude and fuel stockpiles have fallen by 8.7 million barrels per day in May, a record pace and nearly double the average rate since the conflict began.
Flows through the Strait of Hormuz remain at approximately 5% of normal levels, with reduced exports the primary driver of the drawdown.
Around two-thirds of the inventory decline reflects lower oil-on-water stocks as exports have fallen faster than imports.
Demand weakness is compounding the supply disruption, with Chinese refinery imports and fuel sales dropping sharply.
Europe's jet fuel imports are running approximately 60% below 2025 average levels.

The current oil inventory drawdown is unprecedented and highlights the significant impact of geopolitical conflicts on supply chains and energy markets.
Historical patterns of oil supply disruptions have often led to heightened volatility in prices, with current events suggesting a critical threshold has been breached.

The immediate consequence is a likely floor under oil prices, as the severe supply shock is counterbalanced by weakening demand.
Long-term operational implications include potential shifts in energy sourcing strategies and increased pressure on logistics and airline sectors in Europe.

Potential risks include further escalation of geopolitical tensions that could exacerbate supply disruptions.
Competition for alternative supply routes may be limited, creating dependencies on existing infrastructure and relationships.

The trajectory of oil prices and inventory levels will depend on any diplomatic progress or alternative supply routes that may emerge in the coming weeks.
Future developments in Chinese demand and European aviation fuel dynamics will signal the broader market's response to ongoing supply challenges.