Strategic petroleum reserves are being rapidly depleted as nations tap emergency crude supplies to mitigate the economic fallout from the Middle East conflict.
The war with Iran and the subsequent shutdown of the Strait of Hormuz — a vital passage that handled roughly 20% of the world’s oil trade prior to the conflict — have produced an oil supply disruption not seen in decades.
This crunch has driven countries across the globe to urgently seek alternatives to compensate for the lost supply.
Numerous governments, especially in Asian nations that rely heavily on energy from the Middle East, have also implemented steps to reduce fuel demand.
In March, the International Energy Agency (IEA) orchestrated a substantial release of oil reserves — around 400 million barrels — from the emergency stockpiles of industrialized nations. This action was intended to secure sufficient supply and stabilize crude prices.
Strategic reserves act as a buffer against oil shocks
Before the war, global crude oil markets were experiencing a surplus. Major economies had built up extensive strategic reserves, with the largest stockpiles worldwide held by China, the United States, and Japan.
As of December 2025, China possessed nearly 1.4 billion barrels in its inventories, encompassing both commercial and government-held reserves, according to data from the US Energy Information Administration (EIA).
The US maintained roughly 413 million barrels in its Strategic Petroleum Reserve, along with an additional 411 million barrels of commercial crude oil inventories.
Japan held the third-largest strategic oil inventories, with approximately 263 million barrels solely in government-controlled reserves.
Meanwhile, EU countries are legally required to maintain emergency stocks equivalent to at least 90 days of net imports or 61 days of consumption.
The bloc’s nations contributed about 20% of the 400 million barrels released as part of the IEA-coordinated effort, with Germany releasing 19.5 million barrels, followed by France (14.6), Spain (11.6), and Italy (10).
India held roughly 21 million barrels in its strategic reserves, according to the US EIA.
These currently provide coverage for about 9.5 days of net oil imports, per S&P Global.
However, coverage rises to around 74 days when accounting for reserves held by state-run oil companies.
Beyond these strategic reserves, millions of barrels of Russian crude sitting on stranded oil tankers at sea also became accessible to buyers in Asia after the US temporarily waived sanctions on this oil to enhance global supply.
When will oil reserves hit critically low levels?
These oil inventories have thus far helped absorb the energy shock and manage supply volatility.
But nearly three months after the war began, oil traffic through Hormuz remains at a standstill, despite hopes that Washington and Tehran are moving closer to a deal to end the conflict and reopen the key waterway.
As the disruption continues, countries have persistently drawn down both strategic reserves and commercial inventories at a swift rate.
The IEA reported that global observed oil inventories fell at a record pace in March and April, declining by 246 million barrels.
The agency’s chief, Fatih Birol, recently cautioned that oil stocks are “not endless” and are decreasing “very fast” worldwide. He also emphasized that it will take “a lot of time” for production and refining capacity to return to pre-war levels.
US investment bank Goldman Sachs issued a similar warning last week, stating that global oil stockpiles are being drawn down at a record pace this month.
“At the current pace of drawdown, commercial oil stocks could reach critically low levels by the end of June,” Neil Shearing, chief economist at Capital Economics, wrote in a research note on May 18.
If supply conditions do not improve soon, “prices could rise sharply,” Shearing warned.
Iran war: Who benefits from the oil price shock?
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
How will the drawdown impact prices?
The situation has sparked fears of shortages, particularly during peak summer demand.
If supply disruptions persist, “shortages will not be felt as acutely across all geographies and sectors,” Antoine Halff, non-resident fellow and energy expert at Columbia University’s Center on Global Energy Policy, told DW.
He noted that Asian countries are likely to be the most affected due to their heavy dependence on Middle Eastern energy, while air travel and aviation fuel are among the sectors and product categories most severely impacted.
It will also drive a surge in oil prices, which “will be felt everywhere, including in countries that benefit from ample domestic supply such as the US,” Halff said.
Crude prices already remain elevated compared to pre-conflict levels, reflecting supply constraints and a geopolitical risk premium.
At the same time, prices have been volatile and sensitive to headlines, declining after statements indicating a quick resolution to the conflict and spiking when signs suggest that the strait will remain closed for longer.
Helima Croft, head of Global Commodity Strategy and MENA Research at RBC Capital Markets, believes the markets may be underestimating the challenges involved in resolving the conflict.
“The fundamental reality is that expectations for a near-term, full Hormuz recovery rest on unrealistic assumptions about the ease of resolution and the strategic calculations of all parties involved,” she wrote in a report.
If the current rate of supply loss continues, the expert estimates, “cumulative crude losses will exceed 1 billion barrels by month-end and approach 1.5 billion barrels if the situation remains unchanged through June.”
This will drive oil prices toward 2008 peak levels, she said. “At that stage, demand destruction will likely be what balances the market.”
Some countries have already introduced measures to curb demand and conserve fuel, such as shorter workweeks in the Philippines and reduced transport use in places like Pakistan.
Indians fall back on polluting fuels amid gas crunch
To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video
Another coordinated release of strategic oil reserves?
Amid depleting inventories, however, governments appear hesitant about a second coordinated release of strategic reserves.
French Finance Minister Roland Lescure, who recently hosted his counterparts from G7 nations, told the Financial Times that the stocks are “finite” and they could not be released “without having visibility on the duration and intensity of the conflict at this stage.”
Halff said that should Hormuz remain blocked for much longer, “there just isn’t much governments can do to ensure supply and keep prices in check at the same time.”
“Releasing oil from strategic reserves can help, but only up to a point, as supplies are not limitless,” he said.
Edited by: Rob Mudge
Your feedback