Industry Odisha Bureau, Oct 26: Depleting global reserves leave India and the world economy exposed to lingering oil pressure. Earlier in the US–Iran conflict, crude oil spikes faded quickly on diplomatic hopes. The latest surge has been slower and far more stubborn. It followed Houthi strikes on a Saudi export route, now reopened. Prices, however, have not retreated.
An Economic Times analysis warns the shock could turn into a lingering problem. Oil data are often revised, but agencies agree on the direction.
Global inventories stood at 8.21 billion barrels in January, the International Energy Agency (IEA) said. By September’s end, they were 509 million barrels below pre-war levels. In that month, onshore stocks fell 113 million barrels. Tanker-held oil rose 103 million barrels, masking the drop. Refiners can use oil on land, not cargo still at sea. Onshore inventories are now at their lowest since at least 2016.
Global reserves are depleting too. The US Strategic Petroleum Reserve held 415.4 million barrels in late February. By October 16, it had fallen to 282.7 million barrels. Emergency releases eased shortages but left thinner buffers for fresh shocks.
Three pressure points now stand out. The first is the Strait of Hormuz, which carried about 20 million barrels daily pre-war. IEA figures put September flows at 10.9 million barrels a day. Bypass pipelines moved about 5.6 million, though part of that flow predated the war. Attacks also briefly halted Saudi Arabia’s East–West pipeline in September. Brent spot crude, priced for immediate delivery, touched $131 a barrel on September 15.
The second is winter diesel demand. Colder weather lifts use of diesel and heating oil, both distillates. In the US, consumption typically rises 2–3% in winter. Refiners must process more crude to meet that need. Yet Gulf diesel exports in August were just over a quarter of pre-war levels.
The third is the US reserve’s eventual refill. Washington released 172 million barrels as an exchange, not an outright sale. Companies must return the oil later, with extra barrels as a premium. The US Energy Information Administration (EIA) projects refilling from the second half of 2027. That would add demand just as markets try to rebuild stocks.
High crude prices are now feeding inflation worldwide, the analysis notes. That is pushing up US bond yields, tightening borrowing conditions globally. For India, a large oil importer, that means a costlier import bill and rupee pressure. Fuel costs and inflation could also rise, though taxes shape pump-price changes.
On October 8, President Donald Trump said talks with Iran were productive. He ruled out attacking Iran before November 3 but kept the blockade. A full Hormuz reopening would ease pressure considerably. Renewed attacks would hit inventories that are already low.
The market must therefore prepare for duration, not just peaks. A brief spike to $120 that falls back is easier to absorb. Oil holding near $117 for a year would cost far more. How long prices stay high may matter most.
