Publications: Notes at the Margin

Minimum Inventory Operating Levels May Exist, But There Is Little Risk of Stocks Falling to Such Levels in 2026 (June 15, 2026)

 

There has been widespread discussion lately of minimum operating levels for oil inventories. Amin Nasser, CEO of Aramco, warned in May that stocks could reach critically low levels in June. He explained that inventories today were not “a proper reflection of the current market tightness” because only a fraction is available: “The rest is locked up in pipeline fill, minimum tank levels and other day-to-day operational constraints.”[i]

 

Neil Chapman, an ExxonMobil senior vice president, told an audience last month that “we’re approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that's going to hit those really low levels in two weeks or three weeks. But once you get to that point, you'll see prices shoot up.”[ii]

The well-known oil market analyst Jeff Currie also recently warned that inventories were nearing minimum operating levels in Asia, adding that Europe would be next and that the US could be “facing shortages by July.”[iii] Echoing Nasser, he added, “A large portion of that oil is needed to keep pipelines and storage systems running safely, leaving only a smaller share available for the market. Asia is already close to these so-called ‘minimum operating levels.’”

 

Meanwhile, oil inventories and prices have continued to fall. At mid-June, Aramco’s warning in May has proven wrong. Prices have declined by 10% with the Strait of Hormuz still closed. Prices in Asia also showed no sign of shortages.

 

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