Oil market at 'tank bottoms' in Asia, and Europe isn't far behind, warns Carlyle's Currie

Oil markets are approaching critical minimum operating levels in Asia, with Europe potentially following suit, and the United States at risk of shortages by July, warned Jeff Currie, the Chief Strategy Officer of Energy Pathways at Carlyle, on Monday. His comments reflect the ongoing global energy crisis triggered by the conflict in Iran.

Currie noted that headline global inventory figures can be deceptive, as a significant portion of stored oil worldwide is not readily available for immediate use. Much of this oil is essential for maintaining the safety of pipelines and storage systems, resulting in only a limited amount being accessible to the market. Currently, Asia is nearing these "minimum operating levels," Currie conveyed during his remarks at the UBS Wealth Conference in Singapore.

The global oil markets have experienced heightened pressure since the onset of the Iran war earlier this year, with disruptions in shipping through the Strait of Hormuz contributing to a significant reduction in energy exports from the Middle East.

"We've seen explosive price movements in oil products. While jet fuel prices have decreased, diesel prices have now surpassed those of jet fuel. The situation in Singapore persists — the problem has shifted from jet fuel to diesel," Currie commented.

Europe could face similar pressures in the near future, as current relief from U.S. oil supplies may be temporary, coinciding with the start of the summer driving season. "I would say, Asia, you're experiencing it now. Europe, you can expect this in about a month, and anticipate issues in the U.S. by July," Currie remarked.

"All the inventories drawn from the U.S. Strategic Petroleum Reserve are being exported to Europe. Consequently, Europeans may believe there is no issue as they receive these imports from the United States, but this situation is not sustainable," he explained.

His remarks align with recent warnings from the International Energy Agency (IEA) indicating that the global oil market may encounter a significant supply shortfall during the peak summer consumption months, particularly if Middle Eastern exports do not recover and inventories continue their downward trend.

"We may be entering a critical phase in July or August if we do not see improvements in the current situation," IEA chief Fatih Birol cautioned last week.

Currie dismissed suggestions such as suspending the U.S. federal gasoline tax as inadequate to resolve the core supply issues. "Such measures do not address the fundamental problems. The only viable solution is to enhance the availability of physical oil supply," he stated. While the release of oil from the U.S. SPR has provided some temporary relief, Currie emphasized that market pricing indicates persistent underlying shortages.

Ultimately, he argued that reopening the Strait of Hormuz represents the most viable long-term solution; however, even this action would require time to stabilize the markets. Currie pointed out that dwindling global inventories are also empowering Iran in its ongoing negotiations.

U.S. President Donald Trump, on Sunday, advised his team against hastily negotiating a deal with Iran to conclude the conflict and reopen the Strait of Hormuz, stating, "With each passing day, Iran's negotiating leverage increases. Why? Because oil inventories continue to decline. The moment you believe you have succeeded is when you may realize you have actually failed, and Iran's negotiating position has never been stronger in the past 47 years."