Us crude inventories fall sharply as Hormuz crisis disrupts supply

Wednesday 22 April 2026 - 08:40

By: Dakir Madiha

Us crude inventories fall sharply as Hormuz crisis disrupts supply

US crude oil inventories posted an unexpected decline of 4.4 million barrels in the week ending April 17, far exceeding market expectations for a one million barrel draw. The drop follows a 6.1 million barrel increase the previous week and reflects growing volatility in global oil markets as disruptions linked to the Strait of Hormuz enter their eighth week.

The decline is largely driven by a surge in exports as refiners in Asia and Europe seek alternatives to reduced Middle Eastern supply. Shipments of US crude to Asia reached 1.41 million barrels per day by late March, matching flows to Europe, as regional buyers scrambled to secure fuel. At the same time, exports from the Middle East have fallen by nearly 60 percent compared with pre conflict levels, intensifying reliance on US output.

Rising demand abroad has pushed US export infrastructure close to capacity. A wide price gap between Brent and West Texas Intermediate crude, ranging between 12 and 15 dollars per barrel, has created strong incentives for arbitrage. Forecasts indicate Brent prices could reach 115 dollars per barrel in the second quarter, supported by higher transport costs and constrained supply routes tied to the ongoing disruption in Hormuz.

Domestic reserves are also under pressure. The government released 4.2 million barrels from the Strategic Petroleum Reserve during the same week, bringing total holdings down to 405 million barrels, well below maximum capacity. Fuel inventories show additional strain, with distillate stocks falling 4.59 million barrels and gasoline inventories declining by more than 5.1 million barrels. Both remain below their five year averages, signaling tightening conditions across the energy system.

Uncertainty surrounding the Strait of Hormuz continues to weigh on market outlook. The waterway has remained largely closed since late February amid military escalation involving the United States and Israel against Iran. A brief reopening on April 17 triggered a 9 percent drop in oil prices, but the route was quickly shut again after the seizure of an Iranian flagged vessel. Prolonged disruption has raised concerns among traders about supply stability and increased warnings that sustained pressure on energy markets could heighten the risk of a global economic slowdown.