By Carol Ryan
"Preppers" hoard essentials like water, food and fuel. Hit by the second global energy crisis in four years, governments are developing their own bunker mentality.
If they follow through on plans to stockpile more oil, energy prices could stay higher for longer no matter what happens next in the Middle East.
As it is, oil prices remain elevated and have grown volatile in recent days on renewed fighting that threatened fragile ceasefires.
"I think we are at a pretty critical juncture," says Rick Bandazian, a trader and founder of Offsides Macro, a trading analytics platform. Based on WTI futures that he tracks, oil traders are still positioned for prices to go higher than they are today, but less aggressively than they were in mid-March when bullish bets peaked.
Even if a peace deal eventually materializes, the oil price isn't likely to fall back to levels seen before the war. There is a backlog of tankers loaded with around 100 million barrels of oil that needs to clear the Strait of Hormuz. And it might take time for shippers and insurers to get comfortable with the risks of resuming traffic.
Close to 500 million barrels of crude oil and refined product are needed to replenish the inventories used up outside the Persian Gulf so far, a number that rises by 5.8 million barrels for every day the strait remains closed, according to S&P Global Energy. Even if a 1-million-barrel-a-day surplus were to magically appear, it would take more than a year to get global oil inventories back to prewar levels.
But governments scarred by recent experience will want more than a return to normal. Many analysts think stockpiles will eventually settle higher than they were before the war, as countries will want a larger cushion against future energy shocks.
"Importing governments are asking one question, 'What do we do to make sure this never happens again,'" says Kevin Book, co-founder of ClearView Energy Partners.
Pakistan, which has no strategic oil reserve, now plans to set one up. It wants international oil producers to build commercial inventories in a new "Energy City," likely to be located at Port Qasim, near Karachi. The Philippines is also establishing its first strategic petroleum reserve program.
The Indonesian government said it would build new storage facilities to boost stockpiles, and India is expanding its reserves. Japan has pledged $10 billion in financial aid to help countries that want to build storage facilities and oil stockpiles in Asia. All of this should keep the oil market tight.
It's easy to see why it may take so long to replenish inventories and why governments would be in stockpiling mode.
Even if the strait reopens this month, the International Energy Agency expects the oil market to be short of barrels until the fourth quarter of this year. Only then, when a small surplus is forecast, can energy inventories that are rapidly depleting be restocked.
Sultan Ahmed Al Jaber, chief executive of the Abu Dhabi National Oil Co., thinks it will take four months for traffic to get back to 80% of prewar levels. He says getting fully back won't happen before the first or second quarter of 2027. Saudi's state oil company, Saudi Aramco, gave a similar time frame.
Saudi Arabia and the U.A.E., which both have spare capacity, should be able to increase production quickly. After leaving the Organization of the Petroleum Exporting Countries last month, the U.A.E. is now free to pump as much oil as it wants. Producers like Iraq and Kuwait will need more time. Both countries are more reliant on foreign oil-field-service companies for drilling and must reinject pressure into mature, low-pressure oil wells.
And once inventories get back to more normal levels? Things get murkier from there, especially when it comes to oil demand.
Previous shocks caused big shifts in energy strategies. The twin oil crises of the 1970s forced the U.S. to use energy more efficiently and to switch to alternative fuels where it could. This is one reason the U.S. generates just 1% of its electricity from petroleum today, compared with close to a fifth in the early 1970s.
Similar changes may be afoot today in other areas. In addition to stockpiling, countries are looking at ways to produce more energy at home. European Union ministers are debating whether to boost oil and gas production in the region, which would have been unthinkable a few years ago.
The availability of cheap Chinese electric vehicles and solar panels also gives more options to countries trying to wean themselves off fossil-fuel imports. In March, 50 countries set all-time records for imports of Chinese solar components, data from think tank Ember shows.
But a true energy transition away from oil will take time. For now, the imperative to boost inventories will be the prevailing, and more powerful, impulse.
Write to Carol Ryan at carol.ryan@wsj.com
(END) Dow Jones Newswires
June 09, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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