How long will oil reserves last?

What if the Strait of Hormuz remains closed for longer?

The Strait of Hormuz has been closed for three months. Only a portion of the 20 million barrels of oil that were previously transported through the strait each day has been able to be rerouted to other export routes. As a result, the oil market is facing a daily supply shortfall of around 13 million barrels, which accounts for a good 12% of global oil demand. To fill this supply gap, more oil has had to be drawn from reserves since the start of the war than ever before, according to the International Energy Agency (IEA). Should the blockade of the Strait of Hormuz continue for even longer—and that seems likely—stocks will continue to deplete. The key question for the oil market is therefore how large these reserves are and how long they will last.

How much oil is in storage?

The IEA’s oil experts currently estimate global stockpiles of crude oil and petroleum products such as gasoline, diesel, and jet fuel (the so-called observed reserves) at just under 8 billion barrels. This corresponds to 80 days of global oil consumption. About half of these reserves are held by OECD countries. In relation to their share of global oil consumption (around 45%), OECD countries thus have above-average reserves. China (16% share of consumption) has stockpiles of about 1.4 billion barrels, meaning its share of total stockpiles roughly corresponds to China’s share of global consumption.

However, not all of the total stockpiles can be used flexibly to close the gap, as about a quarter is currently in transit in tankers and therefore cannot be clearly allocated. We therefore focus below on the stockpiles in OECD countries:

• These amount to just over 4 billion barrels. About 1.2 billion barrels constitute strategic reserves controlled by OECD governments and are fully available to mitigate potential supply shortages.
• The remainder—approximately 2.8 billion barrels—consists of commercial reserves in OECD countries controlled by private industrial companies such as refineries.

We assume that the strategic reserves can be fully utilized and half of the commercial stocks can be tapped. This results in anavailable stock level of oil and oil products for OECD countries amounting to 2.6 billion barrels.

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