Cushing, Oklahoma, known as the pipeline crossroads of the world, is facing a critical oil reserve shortage. The current inventory is 21.6 million barrels, according to the US Energy Information Administration, which is dangerously close to operational stress levels.
Impact on the Oil Market
The low oil reserves in Cushing, Oklahoma, are a result of increased demand for US oil, particularly from regions that typically get their oil and fuel from the Middle East. The Iran war has led to a surge in demand for US oil, causing crude to flow out of Cushing faster than America’s oil drillers can refill it.
US diesel stocks have recently 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 getting drained fast, by 7.2 million barrels last week alone.
The low oil reserves could lead to a potential oil market crisis, with prices potentially rising to $140 to $160 a barrel in the coming months, and gas prices topping $5 if the Strait of Hormuz doesn’t fully reopen.
Consequences of the Oil Shortage
The oil shortage could have significant consequences for the US economy, including higher prices for consumers and potential disruptions to the supply chain. The American Petroleum Institute CEO, Mike Sommers, has raised alarm bells, stating that the US is getting to levels where they are starting to be concerned.
Chevron CEO, Mike Wirth, has also agreed that ultra-low inventories will mean higher prices in the coming weeks. The heads of the International Energy Agency, International Monetary Fund, World Bank Group, and World Trade Organization have released a statement noting the record-pace depletion of global oil inventories poses growing risks to fuel security, the market, and the broader economy.
Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.
