When will global crude oil inventories hit bottom? This is the "pause timetable."

When Will Global Crude Oil Inventories Hit “Bottom”? JPMorgan Has Calculated a Countdown Curve.

In early April, JPMorgan commodity analyst Natasha Kaneva released a new report that systematically modeled the rate of global crude oil inventory drawdown under the impact of a Strait of Hormuz blockade and provided a complete timeline from “bottom” to “rebuilding.” The conclusion is direct: inventory buffers are being consumed rapidly, and the market is not far from its “operating minimum”—either in May or when it bottoms out.

What Is the “Operating Minimum,” and Why Is It the Red Line

To understand this report, you first need to understand a key concept: the operating minimum (Operational Minimum).

This is the functional floor for inventories, not a “zeroing out” in physical terms. Kaneva defines it as the level of OECD commercial inventories that can cover roughly 30 days of forward refinery demand, equivalent to about 842 million barrels.

Below this level, refinery scheduling, logistics coordination, and market liquidity will begin to run into problems. In theory, the system can last for 24 days of coverage (engineering minimum), but that would mean severe operational pressure and a collapse in market liquidity.

It’s like this isn’t your fuel tank hitting empty, but your tank getting so low that the dashboard light turns red—your car can still run, but it could stall at any moment.

Once inventories approach this threshold, prices—not inventories themselves—will become the main balancing mechanism in the market—meaning that high oil prices will force down demand, replacing the inventory buffer’s role.

Countdown: When Will Inventories Bottom Out? Or Right in May

JPMorgan’s calculations show that the scale of this shock is far beyond the past.

The Strait of Hormuz blockade causes an effective daily supply loss of about 14 million barrels (14 mbd). By comparison, during the start of the Russia-Ukraine conflict in February 2022, OECD commercial crude inventories had already fallen to about 968 million barrels—only enough to cover 27 days of forward refinery demand—leaving the system already in a fragile state.

With this shock being larger, the buffer is thinner. Kaneva’s modeling path is as follows:

• April: OECD commercial crude oil inventories consumed about 166 million barrels

• Early May: consume another 67 million barrels

• Then reach the 842 million barrels operating minimum

Pressure on the demand side is already showing. The disruption to middle distillate oil and jet fuel demand in Asia is the most evident, which matches the geographic transmission path of the supply shock—Asian buyers closest to the Persian Gulf take the brunt first.

Supply Restoration: A Three-Phase Roadmap

Even if the strait reopens, supply will not recover immediately. JPMorgan sets three phases:

Phase One (Weeks 1–3): Cautious Reopening, Recover About 6.3 million barrels/day**—about half of total idled production**

Even if a ceasefire agreement is reached, shipowners, port operators, and crews still need to confirm safety before returning to the Persian Gulf. JPMorgan expects it will take shipping companies about two weeks to verify that risks have dissipated.

The specific timeline:

• Week 1: supply increases by 1.7 million barrels/day; producers restart cautiously, avoiding a rushed incremental move

• Week 2: then increases by 2.3 million barrels/day; success in cross-transit in Week 1 boosts confidence

• Week 3: then increases again by 2.3 million barrels/day; safety expectations stabilize, and operational plans gradually take shape

High war-risk insurance premiums, port congestion for loading and unloading, and priority buyers (especially in Asia) taking cargoes first will all constrain the pace of early restoration.

Phase Two (Weeks 4–8): System Normalization, Recover to 29.30 million barrels/day

By the end of the second month, Gulf supply recovers to 29.30 million barrels/day, still about 3.4 million barrels/day below pre-war levels.

Recovery progress varies by country:

• Saudi Arabia: near full recovery; scale advantages and alternative export routes provide support

• UAE: recovery to 95%; dynamics are similar but still depends on a full restoration of operations

• Iraq, Kuwait: recovery to about 80%; constrained by oil fields shut down and logistics hampered driven by storage tanks. Iraq’s southern export system (Busaiyra Oil Terminal, Khor Al Amaya Port) has been interrupted multiple times; alternative routes (Kirkuk–Jeyhan) can only partially compensate. Kuwait Oil Company (KPC) guidance shows that even after a ceasefire, full recovery still takes several months

• Qatar: only 60% recovery; Ras Laffan and related facilities were severely damaged. The repair cycle for LNG and related liquids (condensate, NGL) is as long as several years. QatarEnergy has quantified losses for products including condensate, LPG, naphtha, sulfur, and helium

Phase Three (Months 3–4): Bridging Production Gaps, Recover to 99% of Pre-War Levels

• Month 3: supply recovers to 31.0 million barrels/day, still about 1.7 million barrels/day below pre-war levels

• Month 4: overall recovery to about 99% of pre-war levels**

Saudi Arabia and the UAE will return to full production by then. Iraq recovers to 90%, Kuwait to 80%, and Qatar to 77%—the latter constrained by damage to Ras Laffan/GTL infrastructure, with full repair expected to take 3 to 5 years.

Iran is another tail risk. South Pars Gas Field was attacked, impacting condensate and NGL supply chains. Because gas processing, liquid recovery, and downstream petrochemical systems are highly integrated, the recovery of condensate and NGL production will lag behind the upstream restart. JPMorgan expects that by the end of Month 4, Iran’s production will still be about 200k barrels/day below pre-war levels.

Inventory Rebuilding: How Long Will It Take

After supply recovery, inventories will not rebound immediately.

JPMorgan estimates that about two months after the strait reopens, OECD commercial inventories will only start rebuilding. To return to normal levels equivalent to coverage for 30 days of forward refinery demand, it would require replenishing about 150 million to 200 million barrels.

At a replenishment rate of 30 to 45 million barrels per month (about 1 to 1.5 million barrels/day), the full inventory refill cycle is about four months.

In other words, even if the strait reopens tomorrow, it will still be about half a year before the global crude oil market truly returns to normal.

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