US Oil, Fuel Inventories Fall to Lowest Since 2004 as Middle East Disruptions Drive Export Surge

U.S. crude oil and petroleum product inventories have fallen to their lowest level since 2004 as supply disruptions in the Middle East fuel a surge in exports.

Data from the U.S. Energy Information Administration cited by The Kobeissi Letter on June 5 showed U.S. crude and petroleum product inventories fell by 10.6 million barrels from a week earlier to 1.57 billion barrels last week. That was the lowest level since 2004.

Commercial and government-held crude inventories alone dropped by 15.9 million barrels in the week, the second-largest weekly decline on record.

The drawdown was driven mainly by higher exports tied to supply disruptions in the Middle East. Following the Iran war, the global oil market sought alternative supplies, sharply increasing demand for U.S. crude.

U.S. crude and petroleum product exports climbed to 13.6 million barrels a day from about 3 million barrels a day before the war. That was the second-highest level on record.

The Strategic Petroleum Reserve, or SPR, is also shrinking rapidly. The reserve fell by 7.9 million barrels last week alone, bringing the cumulative decline since the outbreak of the war to 58 million barrels. Stockpiles now stand at 357 million barrels, the lowest level since January.

The market views the U.S. as effectively serving as the global oil market's "lender of last resort." If disruptions to Middle Eastern oil supplies persist, the pace of U.S. inventory declines could accelerate further.