“You’re hitting tank bottom.” That is the phrase one oil industry executive used to describe the state of global petroleum inventories, in a conversation the executive said had already been shared with senior officials in Washington. The same person gave it an unusually specific deadline: mid-to-late June, according to E&E News.
The White House’s response was immediate and direct.
“Politico’s anonymous sources are wrong,” a White House official said, while an Energy Department official added there have been no such discussions about inventory levels, according to E&E News.
Four oil executives told Politico the opposite is true, and at least two of them have now made similar warnings on the record.
Oil inventory data shows the steepest drawdown in decades
The dispute traces back to the Strait of Hormuz, which Iran effectively closed following US and Israeli strikes that began on February 28.
The strait normally carries roughly one-fifth of the world’s oil supply. The inventory drawdown has been underway since the early weeks of the disruption, when the world was already burning through stockpiles at 7.1 million barrels per day.
Worldwide petroleum stocks now hold around 7.5 billion barrels, a decline of approximately 500 million barrels since the conflict began, falling at a rate of roughly 5.8 million barrels per day, according to Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy, cited by E&E News.
Most of that oil already has buyers and is not held in reserve, Burkhard said, and inventories in some regions may be hitting operational minimums.
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On the US side, gasoline inventories fell by 47.5 million barrels between early February and late May, the steepest February-to-May drawdown in EIA weekly data going back to 1990, according to OilPrice.com.
The next-largest February-to-May drawdowns on record were clustered around 30 million barrels, set 15 years ago. US commercial crude stocks separately fell 8 million barrels in the most recent week, the eighth straight weekly decline, leaving stockpiles roughly 3% below their five-year average.
What “tank bottom” means for the strategic reserve
The Strategic Petroleum Reserve has absorbed much of the strain. SPR inventories fell by 9.1 million barrels in a single week and were 36.2 million barrels below year-ago levels, with the recent drawdowns marking the largest weekly SPR withdrawals in history, according to OilPrice.com.
The SPR’s current holdings of roughly 357 million barrels sit well below its maximum capacity of approximately 725 million barrels.
“I’ve never seen inventory numbers fall so much so quickly,” Burkhard said. “It is stunning.” His broader point was that the inventory cushion is the reason prices have not already spiked. “What’s been remarkable is that prices have not moved higher so far, and a big reason for that is the inventory cushion around the world,” Burkhard said. “But that can’t go on forever.”
Exxon and other oil companies are warning about $150 to $160 oil
What separates this warning from typical anonymous-sourcing stories is that the same concern has now been voiced publicly by named executives at major companies.
Exxon Mobil senior vice president Neil Chapman told an investor conference that benchmark Brent crude could reach $150 to $160 per barrel if inventory declines continue, a comment covered when Exxon’s leadership first framed the inventory drawdown not as a forecast but as what the models say happens next once the cushion is exhausted.
“Once you get to that point, then you’ll see prices shoot up,” Chapman said.
“We’re sounding the alarm on these inventories going to record lows,” American Petroleum Institute CEO Mike Sommers said on Fox Business, a program the administration is known to watch closely. “We have to solve this problem in the Strait of Hormuz.”
The warnings extend beyond US oil majors. Frederic Lasserre, head of analysis at commodities trading giant Gunvor Group, said in late April that if the Hormuz closure dragged on for another month, oil markets would effectively run out of stockpiles and hit “tank bottoms,” according to Fortune.
Helima Croft, global head of commodity strategy at RBC Capital Markets, separately described drained storage tanks as an “iceberg under the water” during a Council on Foreign Relations event.
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What the national average gas price shows right now
The national average price for a gallon of regular gasoline stood at $4.26 as of Wednesday, $1.28 higher than before the war started, according to AAA data cited by E&E News. That is down from levels closer to $4.50 reached a few weeks earlier, a decline the administration attributes to market optimism around possible negotiations to reopen the strait.
UBS has forecast Brent near triple digits for the rest of 2026, and Citi has warned that Brent could hit $150 per barrel if Hormuz flows remain disrupted into June, a threshold the calendar is now approaching.
The executives’ inventory warning is effectively the mechanism behind those bank forecasts: the price has not yet fully reflected the supply gap because inventories have been absorbing it, and that absorption capacity is what is now running out.
What the public warnings leave out:
- The inventory concern is not uniform across fuel types or regions. Some of the private conversations with administration officials have focused specifically on jet fuel shortages on the West Coast, a regional and product-specific squeeze that does not show up in national gasoline averages, according to E&E News.
- Total US commercial crude and SPR inventories combined have fallen by around 90 million barrels from their recent peak, including a 16-million-barrel decline in a single week, according to analysis from Saxo Bank cited by Energy News Beat.
- This warning lands in the middle of a midterm election cycle in which Democrats have built close to a seven-point lead in voter intentions, meaning gasoline prices are arriving as a political variable on top of an economic one, The Daily Beast reported.
- GasBuddy has projected the most expensive summer at the pump in years, forecasting $4.48 around Memorial Day and a $4.80 summer average if the strait closure persists, according to Gas Price Check.
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Why summer driving season raises the stakes for oil prices
The reason this dispute matters beyond Washington politics is timing. Peak summer driving season is the period when gasoline demand is highest, and it is arriving at the same moment executives say inventories are at their lowest point of the conflict so far.
If Brent reaches the $150 to $160 range Chapman described, the gap between current pump prices and what the supply math implies would close quickly.
The disagreement between the industry and the White House is not really about whether prices could rise. It is about how much warning the public should be given before they do.
Executives are arguing that the safest message right now is to prepare Americans for higher prices. The administration’s position is that doing so risks becoming a self-fulfilling prophecy.
White House spokesperson Taylor Rogers added a specific prediction in the same statement cited by the Daily Beast, saying gas prices would “drop back to multi-year lows” once the conflict reaches a successful end. Whichever framing proves accurate will likely become clear within the mid-to-late June window both sides are now watching.
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