Jeff Currie, Chief Strategy Officer of the Energy Path business at Wall Street financial giant Carlyle, stated in a media interview on Monday that Asian oil market inventories have fallen to "tank bottoms"—meaning the Asian oil market is nearing its minimum operating levels, with the European market potentially following closely, and the U.S. possibly facing severe shortages by July. The latest remarks from the veteran Wall Street strategist, who accurately predicted the "commodities super-cycle" during the global pandemic, highlight the unprecedented global energy supply shock caused by the Iran war. Currie warned that overall global oil and gas inventory figures could be misleading, as much of the oil stored in global facilities cannot be immediately used for industrial purposes. Speaking to media at a UBS wealth conference in Singapore, he noted that a significant portion of this oil is required to maintain the safe operation of pipelines and energy storage systems, leaving a relatively small amount available for the market; Asia is already approaching these so-called "minimum operating levels." Jeff Currie, the former head of Goldman Sachs' commodities research, known as the "flag-bearer of the commodities bull market," holds significant influence on Wall Street regarding commodity market views. He spent over 20 years at Goldman Sachs before becoming Chief Strategy Officer of Carlyle's Energy Path, a role he still holds. Currie, who also serves as Executive Co-Chairman of Abaxx Markets, drew lessons from recent history, stating that from the 1990s to the early 2000s, tech stocks dominated; then, until around 2014, the energy sector took the lead; after that, tech stocks surged again—and now the tech sector is generating immense, endless demand for electricity and metal raw materials. On the supply side of the energy market, relatively positive news is that U.S.-Iran peace talks are indeed progressing positively, and the market has already begun trading the short-term relief scenario of "Strait of Hormuz reopening—oil flow resuming—oil prices falling"; however, this is not yet a definitive full supply recovery, let alone a complete resolution of the energy shock. Latest reports indicate that the U.S. and Iran are believed to be nearing an agreement to end the war and reopen the Strait of Hormuz, leading to a significant drop in oil prices; the international oil benchmark—Brent crude—fell by about 6% to $97.69 per barrel at one point, while WTI dropped to $90.85, reflecting the market's early bet on a reduction in geopolitical risk premiums. The improving peace talks between the U.S. and Iran are bringing short-term relief expectations to Asian and European oil markets and international oil prices, but it cannot yet be confirmed that the energy crisis has been resolved. The market is currently trading on "declining geopolitical tail risks," while Currie warns that the "physical inventory buffer is already thin." With the Asian oil market having fallen to "tank bottoms," suggesting oil prices may have peaked for the time being, if a diplomatic agreement is quickly reached and the Strait of Hormuz reopens in an orderly manner, oil prices have room to fall further, at least in the short term; if negotiations stall or recovery is slower than expected, the oil market will shift back from "trading on long-term U.S.-Iran peace expectations" to the theme of "inventory depletion." However, risks regarding the peace talks also exist, as Trump has stated he told negotiators not to "rush" into a deal with Iran. "The president is in no hurry, and he won't make a bad deal. So let's see what happens. We need to give diplomacy every chance to succeed before considering other options," said U.S. Secretary of State Rubio in a recent interview discussing Trump's stance. The Asian oil market has fallen to "tank bottoms"! From jet fuel to diesel, energy shortage alerts escalate. Since the outbreak of the Iran war earlier this year, the global oil market has been under severe supply-side pressure, as shipping disruptions through the Strait of Hormuz have significantly reduced Middle Eastern energy exports. Since the Iran war began in late February, the Strait of Hormuz has been effectively blockaded, cutting off one of the most critical shipping channels for supplying crude oil, natural gas, and refined fuel oil to global customers, sharply driving up energy prices and intensifying global investors' inflation concerns. The International Energy Agency (IEA) stated that the supply disruption caused by this geopolitical conflict in the Strait of Hormuz is creating the largest supply-side shock in human history. Wall Street giant Citigroup released a research report stating that if long-term peace talks between the U.S. and Iran remain difficult, leading to prolonged blockade and control of the Strait of Hormuz, the international oil benchmark—Brent crude prices—could rise further from recent significant pullbacks around $100, potentially even reaching new cyclical highs. With the largest surge in inflation data since 2023 triggered by the Middle East Iran war, global bond market traders are actively pricing in the trend that the Federal Reserve is almost certain to begin raising interest rates before December, reflected in bond traders nearly 100% pricing in a 25 basis point Fed rate hike before December. This marks a sharp reversal from just three months ago when the market was betting on deeper rate cuts under Fed Chair Wash. This shift reflects the impact of geopolitical turmoil, U.S. economic resilience, and the AI investment boom driving stock markets higher; all these factors have heightened concerns that inflation may persist above the Fed's 2% target for some time. "Europe will be next. We expect Europe to start having issues sometime after... this bank holiday," Currie stated. Currie added, "We've already seen explosive price increases in refined products. Jet fuel has come down significantly, but diesel is now even higher than jet fuel. So, the problem here in Singapore continues. It has just shifted from jet fuel to diesel." Europe may begin to see similar pressures within weeks, as the current relief from large-scale U.S. oil export flows may only be temporary, and the summer driving season is about to begin. Currie said in the interview, "I would say, Asia, you're already there. Europe, give it about a month, and it will arrive on schedule, then watch closely for any issues that may arise in the U.S. by July." "All the oil and gas inventory released and flowing out from the U.S., from the U.S. Strategic Petroleum Reserve (SPR), is being exported to Europe, so Europeans think they don't have a problem because they're getting all this oil imported from the U.S., but that can't last long-term." His comments follow recent warnings from the IEA. The IEA warned that the global oil market could face a critical supply squeeze during the peak summer consumption period, especially if Middle Eastern exports fail to recover and global inventories continue to decline. Even if the Strait of Hormuz reopens tomorrow, the volume of seaborne oil through the strait may remain significantly lower than pre-Iran war levels for a long time. Saudi Aramco CEO Amin Nasser recently warned that the market has lost about 1 billion barrels of oil over the past two months due to shipping disruptions in the Hormuz Strait; even if passage resumes, low inventories, years of underinvestment, and logistics rebuilding will slow the normalization of the oil market. Overall, Aramco's latest warning essentially signals to the market: "Reopening the strait" does not equal "immediate supply recovery." If the blockade lasts only a short time, the market will still need months to digest inventory gaps, shipping schedule mismatches, insurance costs, and accelerated refinery restocking; crude oil producers will also need considerable time to ramp up drilling. If it drags on for several more weeks, the supply-demand gap could extend into next year, potentially delaying market normalization until 2027. IEA Executive Director Fatih Birol warned last week, "If we don't see an improvement in the situation, we could enter the red zone in July or August." It is understood that Currie dismissed proposals such as suspending the U.S. federal gasoline tax, arguing they are insufficient to address underlying deep-seated supply tightness. He said, "That won't solve anything. The only way to solve this is to increase the availability of molecules," referring to physical oil supply. Currie has previously stated that although releases from the U.S. SPR have provided some relief, market pricing indicates that potential shortages in the U.S. itself remain very severe. From "tank bottoms" to peace prospects: Strait of Hormuz reopening expectations ignite "high oil price relief trade." Currie stated that ultimately, reopening the Strait of Hormuz fully and completely remains the only lasting solution, though even then, market normalization will take time. He believes that declining global inventories are also strengthening Iran's bargaining position in ongoing negotiations. U.S. President Trump on Sunday urged his team not to rush into a deal with Iran to end the war and reopen the Strait of Hormuz. Currie emphasized in the interview, "Every day that passes, Iran's bargaining chips compound. Why? Because oil inventories and stocks continue to decline." "The moment you think you've won, that's precisely when you know you may have already lost. Their negotiating position on this point has never been stronger in the past 47 years." In Currie's view, time is on Iran's side. Because globally available oil inventories are declining daily, with Asia nearing "tank bottoms" and Europe and the U.S. potentially under pressure next; the thinner the inventories, the more urgently the international market needs the Strait of Hormuz to reopen, and the greater Iran's bargaining leverage at the negotiating table. The IEA also warned that if the situation does not improve, the oil market could enter a "red zone" in July/August, precisely due to continued inventory drawdowns, rising summer demand, and constrained Middle East supply. U.S.-Iran peace talks are indeed progressing positively, and the market has already begun trading the short-term relief scenario of "Strait of Hormuz reopening—oil flow resuming—oil prices falling"; however, this is not yet a definitive supply recovery, let alone a complete resolution of the energy shock. As shown above, latest reports indicate that the U.S. and Iran are believed to be nearing an agreement to end the war and reopen the Strait of Hormuz, leading to a significant drop in oil prices. But "positive progress" does not equal "immediate full recovery." Trump has on one hand stated that a deal is "largely agreed," while on the other emphasized "no rush to reach an agreement," and noted that U.S. blockades on Iranian vessels will remain until a deal is reached, verified, and signed; key disagreements still include the Strait of Hormuz blockade, Iran's high-enriched uranium stockpiles, and sanctions arrangements. Therefore, the most accurate assessment is: the market is pricing in an increased probability of peace, not pricing in a normalized supply chain. Currie's warning about "Asia's tank bottoms, Europe following closely, and potential U.S. issues by July" indicates that the physical oil market is already very fragile. The term "tank bottoms" does not mean global book inventories are completely exhausted, but that available, deliverable, market-accessible commercial inventories are nearing minimum operating levels; a large portion of inventories consists of "non-available inventory" required to maintain pipeline, storage tank, and logistics system operations. This means that even if the Strait of Hormuz reopens, short-term supply pressures in Asia and Europe will ease, but refinery operations, shipping, insurance, mine clearance, port scheduling, and inventory rebuilding all require time; oil prices will not necessarily return to pre-war levels immediately. An Axios research report also noted that even if an agreement is finalized, mine clearance, tanker scheduling, and production restarts could keep disruptions ongoing for months. For global markets, the direct implication of these developments regarding U.S.-Iran peace talks is: short-term positive for risk assets, lowering oil prices and inflation expectations, easing upward pressure on U.S. Treasury yields; but medium-term outlook still depends on the speed of physical supply recovery. If the strait gradually reopens and Saudi Arabia, the UAE, and the U.S. increase production or exports to fill gaps, refined product, diesel, and jet fuel tightness in Asia and Europe will ease temporarily, and international oil prices will likely see a round of risk premium unwinding; this would benefit airlines, transportation, consumer sectors, European manufacturing, and high-valuation growth stocks. However, if the agreement is delayed, implementation is unstable, or inventories continue to decline, the "July/August red zone" risk mentioned by the IEA could still rekindle oil price and inflation trade pressures.
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