When will global crude oil inventories &#34;bottom out&#34;? JPMorgan Chase has calculated a countdown curve.
In early April, Natasha Kaneva, a commodities analyst at JPMorgan Chase, released a new report that systematically estimated the consumption rate of global crude oil inventories under the impact of the closure of the Strait of Hormuz, and provided a complete timeline from &#34;bottoming out&#34; to &#34;rebuilding.&#34; The conclusion is direct: inventory buffers are rapidly being depleted, and the market is not far from its &#34;operational minimum&#34;—a potential bottom in May.
<h2>What is the &#34;Operational Minimum&#34; and Why is it a Red Line</h2>
To understand this report, one must first grasp a key concept: Operational Minimum.
This is the functional bottom of inventories, not a physical &#34;emptying.&#34; Kaneva defines it as the level of OECD commercial inventories that can cover approximately 30 days of forward refining demand, corresponding to about 842 million barrels.
Below this level, refinery scheduling, logistics coordination, and market liquidity will begin to encounter problems. Theoretically, the system can sustain coverage for 24 days (engineering minimum), but this would mean severe operational pressure and market liquidity collapse.
It's like not running out of gas, but the tank is so low the dashboard light comes on—the car can still run, but it could break down at any moment.
Once inventories approach this threshold, price, rather than inventory itself, will become the primary market balancing mechanism—in other words, high oil prices will forcibly suppress demand, taking over the buffering role of inventories.
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<h2>Countdown: When Will Inventories Bottom Out? Possibly in May</h2>
JPMorgan Chase's calculations show that the scale of this impact far exceeds previous ones.
The closure of the Strait of Hormuz has caused a daily effective supply loss of approximately 14 million barrels (14 mbd). In contrast, when the Russia-Ukraine conflict broke out in February 2022, OECD commercial crude oil inventories had already fallen to about 968 million barrels, only covering 27 days of forward refining demand, and were already in a fragile state.
This impact is greater, and the buffer is thinner. Kaneva's calculation path is as follows:
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April: OECD commercial crude oil inventories deplete by approximately 166 million barrels
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Early May: a further depletion of about 67 million barrels
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Subsequently reaching the operational minimum of 842 million barrels
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Pressure on the demand side is already evident. Demand destruction for middle distillates and jet fuel in the Asian region is the most pronounced, consistent with the geographical transmission path of the supply shock—buyers in Asia, closest to the Persian Gulf, are the first to come under pressure.
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<h2>Supply Restoration: A Three-Phase Roadmap</h2>
Even if the strait reopens, supply will not be restored immediately. JPMorgan Chase has outlined three phases:
Phase 1 (Weeks 1-3): Cautious Reopening, Restoring Approximately 6.3 Million b/d — About Half of the Shutdown Production
Even if a ceasefire agreement is reached, shipowners, port operators, and crews will need to confirm safety before returning to the Persian Gulf. JPMorgan Chase estimates that shipping companies will need about two weeks to confirm the dissipation of risks.
Specific pace:
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Week 1: Supply increases by 1.7 million b/d, producers cautiously resume, avoiding hasty increases
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Week 2: A further increase of 2.3 million b/d, successful passage in Week 1 boosts confidence
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Week 3: A further increase of 2.3 million b/d, safety expectations stabilize, operational plans gradually implemented
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High war risk insurance premiums, congestion at loading and unloading ports, and priority purchases by buyers (especially in Asia) will constrain the speed of early recovery.
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Phase 2 (Weeks 4-8): System Normalization, Restoring to 29.3 Million b/d
By the end of the second month, Gulf supply will be restored to 29.3 million b/d, still about 3.4 million b/d below pre-conflict levels.
Restoration progress varies by country:
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Saudi Arabia: Near full recovery, supported by scale advantages and alternative export routes
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United Arab Emirates: Recovered to 95%, similar dynamics but still reliant on full operational restoration
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Iraq, Kuwait: Recovered to about 80%, hampered by field shutdowns driven by tank capacity and restart logistics. Iraq's southern export system (Basra oil terminals, KOR) has been repeatedly interrupted, and alternative routes (Kirkuk-Ceyhan) can only partially compensate; Kuwait Petroleum Corporation (KPC) guidance indicates that even with a ceasefire, full restoration will take months.
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Qatar: Recovered to only 60%, with severe damage to Ras Laffan and related facilities. LNG and associated liquids (condensates, NGLs) will take years to repair. QatarEnergy has quantified losses for products such as condensates, liquefied petroleum gas, naphtha, sulfur, and helium.
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Phase 3 (Months 3-4): Bridging the Output Gap, Restoring to 99% of Pre-Conflict Levels
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Month 3: Supply restored to 31 million b/d, still about 1.7 million b/d below pre-conflict levels.
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Month 4: Overall recovery to approximately 99% of pre-conflict levels.
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Saudi Arabia and the UAE will return to full production. Iraq will recover to 90%, Kuwait to 80%. Qatar will be at 77%—hindered by severe damage to the Ras Laffan/GTL infrastructure, with full repairs estimated to take 3 to 5 years.
Iran is another long-tail risk. Attacks on the South Pars gas field have affected its condensate and NGL supply chain. Due to the high integration of gas processing, liquid recovery, and downstream petrochemical systems, the restoration of condensate and NGL production will lag behind upstream restarts. JPMorgan Chase estimates that by the end of the fourth month, Iran's output will still be about 200,000 b/d below pre-conflict levels.
<h2>Inventory Rebuilding: How Much Longer?</h2>
After supply is restored, inventories will not rebound immediately.
JPMorgan Chase estimates that it will take about two months after the strait reopens for OECD commercial inventories to begin rebuilding. To return to normal levels covering 30 days of forward refining demand, approximately 150 to 200 million barrels will need to be replenished.
At a replenishment rate of 30 to 45 million barrels per month (about 1 to 1.5 million b/d), the complete inventory replenishment cycle will take about four months.
This means that even if the strait reopens tomorrow, it will take at least another half a year for the global oil market to truly return to normal.
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At 9 p.m. Eastern Time on Wednesday, Trump delivered a national address, claiming a "rapid and decisive victory" in the US military's war against Iran and stating that core strategic objectives were nearing completion. He emphasized that Iran would never be allowed to possess nuclear weapons and called the US strikes on Iranian nuclear facilities a "huge success." Regarding the Strait of Hormuz, Trump encouraged countries to "take responsibility for themselves" without providing a clear timetable for its reopening. Escalating tensions in the Middle East have put markets on edge, and the US military may intensify its strikes in the coming weeks. Will the US-Iran conflict end quickly as Trump hopes? How will the energy market evolve?

At 9 p.m. Eastern Time on Wednesday, Trump delivered a national address, claiming a "rapid and decisive victory" in the US military's war against Iran and stating that core strategic objectives were nearing completion. He emphasized that Iran would never be allowed to possess nuclear weapons and called the US strikes on Iranian nuclear facilities a "huge success." Regarding the Strait of Hormuz, Trump encouraged countries to "take responsibility for themselves" without providing a clear timetable for its reopening. Escalating tensions in the Middle East have put markets on edge, and the US military may intensify its strikes in the coming weeks. Will the US-Iran conflict end quickly as Trump hopes? How will the energy market evolve?

Trump's tough stance: Is the war with Iran nearing its end?

JPMorgan Chase analysts estimate that the closure of the Strait of Hormuz has resulted in a daily loss of approximately 14 million barrels in global effective supply. OECD commercial crude inventories are projected to deplete by 166 million barrels in April and another 67 million barrels by early May, reaching an "operational minimum" of 842 million barrels. At this point, prices will become the primary market balancing mechanism, replacing inventory levels. Even if the strait reopens, supply restoration will undergo three phases, taking about four months

- JPMorgan analysts predict a significant depletion of global crude oil inventories due to the ongoing blockade of the Strait of Hormuz, estimating that inventories may hit operational minimums by May.  
- The operational minimum, defined as the level that covers approximately 30 days of refinery needs, is set at about 842 million barrels, below which market liquidity and coordination may falter.  
- Even if supply resumes after the blockade, it may take up to six months for inventories to rebuild to normal levels, depending on the pace of supply recovery.

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