Cushing, Oklahoma, known as the pipeline crossroads of the world, is facing a critical situation as its oil tanks are hitting bottom. The current inventory is 21.6 million barrels, which is dangerously close to operational stress levels. This could lead to a tipping point in the oil market, causing prices to become volatile.

Impact on the US Oil Market

The low oil reserves in Cushing are a result of increased demand for US oil, particularly from regions that typically rely on the Middle East for their oil and fuel needs. The US has become the supplier of last resort, leading to a surge in demand for US oil during the Iran war. As a result, crude has flowed out of Cushing faster than America’s oil drillers can refill it.

US diesel stocks have also hit their lowest level since 2003, and gas inventories have been falling, about 5% below where they were a year ago. Other US commercial crude storage facilities outside of Cushing are also being drained rapidly. The world’s oil market could enter the danger zone within a month, leading to panic mode and potentially causing prices to rise significantly.

Consequences of Low Oil Reserves

If the situation doesn’t resolve itself, prices could rise to $140 to $160 a barrel in the coming months, and gas could top $5. In extreme cases, oil could march above $200 a barrel, leading to gas prices around $9 a gallon. This would have a significant impact on the US economy and consumers.

Experts are raising alarm bells, warning that the low oil reserves are reaching a breaking point. The American Petroleum Institute CEO, Mike Sommers, stated that the current inventory levels are causing concern, and the senior vice president of ExxonMobil, Neil Chapman, agreed that ultra-low inventories will mean higher prices in the coming weeks.

Original reporting: KTVZ (Central Oregon) — read the source article.