1/ The world is very rapidly running out of refined fuel due to the Strait of Hormuz blockade, according to a new Goldman Sachs report, with only 45 days' worth of stockpiles of jet fuel, naphtha, and LPG remaining. Rationing, surcharges, and mass cancellations are forecast. ⬇️
2/ A research note authored by Goldman Sachs strategists Yulia Zhestkova Grigsby and Daan Struyven has examined the impact of Middle East disruptions on refined product markets, finding that jet fuel and diesel are being hit far harder than crude oil. 3/ The analysts estimate that about 101 days' worth of usable global oil stocks remain in stockpiles. (While more oil than that is stockpiled, it can't all be used, as the JP Morgan report summarised below explains.) bsky.app
1/ The world faces a catastrophic cliff-edge shortage of oil due to the Strait of Hormuz blockade in the next four weeks, analysts warn. This will cause a deep recession, fuel rationing, the shutdown of entire industries, and oil prices potentially as high as $370 per barrel. ⬇️
4/ Stockpiles of refined fuels are much lower according to the Goldmans analysts, with only 45 days' worth of demand remaining in stockpiles. Europe, Asia outside China, South Africa, India, Thailand, and Taiwan are said to be particularly exposed. 5/ They say that "[t]he speed of depletion and supply losses in some regions and products are concerning, with easily accessible refined products buffers approaching very low levels fast." 6/ Inventories of naptha, which is used as a key ingredient for plastics and industrial chemicals — have fallen significantly. Stockpiles in the UAE's port of Fujairah have fallen by 72% and by 37% in the Amsterdam-Rotterdam-Antwerp refining hub. 7/ Jet fuel is being used up rapidly, to the point that Goldman estimates that European commercial jet fuel inventories could fall below the International Energy Agency's 23-day threshold as soon as June. If coverage drops under this level, physical shortages may result.
8/ The UK is the worst affected country in Europe, according to the analysts. They comment that the UK is "the largest net importer of jet fuel in Europe, and it holds no strategic reserves, leaving commercial inventories as the primary buffer." 9/ "As a result, inventories in some countries, especially the UK, could fall to critically low levels, increasing the likelihood of rationing measures." They warn that recovery after the Strait reopens will be slow, even if it begins imminently. 10/ "Even if Hormuz flows started recovering soon, any full normalization of deliveries would take at least several weeks." (Other analysts suggest it would not return to full normalisation before December 2026.) bsky.app
1/ Oil prices will rise to at least $140 per barrel by June if the Strait of Hormuz is not reopened by July, and will not return to pre-Iran War levels before 2028 even in a best-case scenario, predicts Goldman Sachs. It warns of price surges and major economic impacts. ⬇️
11/ Airlines are particularly reliant on Gulf medium-heavy crude oil for jet fuel production. There are relatively few producers of such refined products outside the Middle East, which is leading to what Goldman calls "extreme tightness" in Europe’s jet fuel market. 12/ The Gulf region produces about 20% of the jet fuel traded on international markets, and 40% of Europe's supply. With that route effectively blocked, airlines are now competing for supplies from elsewhere. This has already doubled jet fuel prices since 28 February. 13/ As an earlier report from the same analysts noted in March, "Prices have rallied much more for many refined products than for crude, with Singapore and North-West Europe jet fuel prices setting all-time highs above $200 per barrel [of fuel, not oil] last week." 14/ Airlines have already cut about 2 million seats from schedules this month. Major carriers face massive cost increases (Air France expects an extra $2.4 billion; American Airlines more than $4 billion). 15/ Ticket prices are rising, and flight cancellations or demand destruction are likely. Some airlines are preparing for oil prices of $175 per barrel (currently around $115). Analysts have warned that the exhaustion of oil stockpiles could soon see prices above $200 per barrel. 16/ IATA has warned that while total revenues might look high due to increased ticket prices, airline net profit margins have shrunk to roughly 3.9%, leaving carriers with virtually no cushion to absorb the surge in fuel costs. This is already causing serious damage. 17/ News reports show that airlines around the world are having to cut costs and add surcharges. They are warning of further disruption: 🇬🇧 EasyJet expects a pretax loss of £540–560 million for the first half of its 2026 fiscal year due to extra fuel costs. 18/ 🇬🇧 Virgin Atlantic's CEO says the airline will struggle to turn a profit this year even after adding fuel surcharges, noting that "some of this disruption to global energy prices will be here to stay." 19/ 🇩🇪 Lufthansa has been forced to immediately shut down its feeder airline CityLine and retire 27 older, less fuel-efficient aircraft ahead of schedule. It has cancelled around 20,000 flights to save more than 40,000 metric tonnes of jet fuel. 20/ 🇺🇸 United Airlines CEO Scott Kirby has prepared the company for oil prices reaching $175 per barrel through 2027, which could result in $11 billion in fuel costs. 21/ The airline has cut its previously planned schedule by about 5% over the next six months and suspended service to high-risk or low-demand regions including Tel Aviv and Dubai. 🇺🇸 Spirit Airlines ceased all operations on May 2, citing rising fuel costs. 22/ 🇳🇱 KLM has cut 160 flights for May, citing routes that are "no longer financially viable to operate." Economy fares on long-haul return flights have been hiked by €100, and by €70 for flights to the US, Canada and Mexico, with an extra €10 for short- and medium-haul. 23/ 🇦🇪 Emirates has added surcharges as high as $1,023 per leg for business and first-class travel to the Americas. 24/ Higher jet fuel prices will indirectly lead to higher gasoline prices as well. With short-haul flights likely to take the brunt of cancellations, passengers will switch to the roads, causing demand for gasoline to rise even as the supply comes under strain. /end Sources: 🔹 finance.yahoo.com 🔹 thetimes.com 🔹 arabnews.com 🔹 southfloridareporter.com 🔹 pbs.org 🔹 cnbc.com 🔹 edition.cnn.com