Oil prices jump as crude stockpiles are being quickly depleted - and travel season starts Memorial Day weekend

MW Oil prices jump as crude stockpiles are being quickly depleted - and travel season starts Memorial Day weekend

By Joy Wiltermuth and Nora Redmond

The flow of oil through the Strait of Hormuz is 95% below regular levels, says Goldman Sachs

A U.S. flag lies against a memorial wall at the Vietnam War Memorial in the National Mall ahead of Memorial Day on May 26, 2024.

Oil prices were climbing Thursday, with the rapid depletion of global crude stocks in focus - and there's no relief in sight just yet.

Physical supplies of oil are continuing to tighten, with exports through the Strait of Hormuz 95% below normal levels, according to analysts at Goldman Sachs led by senior commodities strategist Yulia Zhestkova Grigsby.

The Goldman team estimated that total oil loadings from Iran have fallen to close to zero across the past seven days, down from an average of 2.5 million barrels per day last year, in a note published Wednesday.

More broadly, the world has been losing an estimated 14 million barrels of Persian Gulf crude supply every day of the Iran war, or about 400 million barrels a month, said Pavel Molchanov, investment-strategy analyst at Raymond James, on Thursday.

"That is why we are seeing inventories around the world declining," Molchanov said. It's also why there has been "a lot of emotion" driving oil prices, likely including Wednesday's roughly 6% drop following what seemed like optimistic comments from the White House about a potential resolution to the war.

"These daily moves, they go down too much and then they go up too much," Molchanov said. "This intensity of emotion reflects the uncertainty in the market."

The supply-and-demand imbalance continues to underpin oil prices. West Texas Intermediate crude's July contract - the most active - rose by 4.2% to $102.39 a barrel (CL.1) (CLN26) on Thursday, bringing total gains to more than 40% since the first day of trading after the U.S. and Israel first started striking Iran.

Brent crude futures for July delivery advanced 3.6% to $108.74 a barrel (BRN00) (BRNN26).

Both moves came after Reuters reported that Iran's Supreme Leader said enriched uranium must remain in the country. President Donald Trump has insisted that such nuclear material must be removed for the U.S. to agree to a deal to end the war.

"In our book, crude needs to break $80 before we can entertain a potentially durable decline, until then knee-jerk reactions are likely," Jeff deGraaf, founder of Renaissance Macro Research, wrote in a Thursday morning client note.

Meanwhile, U.S. crude stockpiles have declined for the fourth consecutive week, with inventories down 7.9 million barrels in the week ended May 15, per data collected by the U.S. Energy Information Administration.

Even if a deal emerges soon to reopen the Strait of Hormuz and shipping traffic is normalized in July, the cumulative supply loss from the first day of the Iran war is likely to be around 1.5 billion, according to Molchanov at Raymond James.

For perspective, the historic release of 400 million barrels agreed to in March from global strategic reserves would cover only about one-quarter of the lost supply.

All this supply crunch is occurring just as the U.S. travel season is due to begin this weekend - a seasonal phenomenon that is likely to boost demand for gasoline, diesel and jet fuel.

Physical Brent prices remain significantly lower than their early-April highs mainly because of releases of emergency stockpiles of oil by the International Energy Agency and a lack of demand for Chinese crude, with imports plunging by 38% since the war started, driven by a lack of movement in the Persian Gulf and fewer exports to Russia.

"One of the points we've made throughout the war is that the White House's decision-making will be influenced by domestic politics," said Molchanov. "They see the same polling we all see - they can see the war is not popular among the American public."

Furthermore, anxiety from American voters about the cost of living, including high gasoline prices, will likely be a consideration heading into the midterm elections. "That is going to play into the White House's approach to ending the war," Molchanov said.

The White House didn't immediately respond to a request for comment.

-Joy Wiltermuth -Nora Redmond

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May 21, 2026 10:06 ET (14:06 GMT)

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