Since the end of March, oil prices have been sticky, hovering around $100 per barrel, give or take. Since supply has been down for a while now, why aren’t they higher?

Because the world has been using what’s in storage. 

In reviewing the International Energy Agency’s (EIA) recent May 13 report, since the end of February, global oil inventories have dropped by 246 million barrels. And looking at it another way, if oil that's essentially trapped, sitting onshore or on tankers stuck in the Gulf, is stripped out of calculations, total global stocks have actually fallen by 378 million barrels since the conflict began. It’s a historic drain.

To put these numbers in context, the current total global observed inventories are down to 7.9 billion barrels from 8.2b at the end of February. The world consumes about 100mm barrels per day. Based on this, it actually seems not great but manageable, unless supply stays lower for a lot longer. 

On the demand side, it is lighter. Refiners have scaled back crude imports and end users are also reducing consumption. The petrochemical sector, where feedstock availability is becoming increasingly constrained, has reduced demand, while aviation activity is also below normal levels, thanks to higher jet fuel prices. The IEA expects global oil demand to fall by 2.4 mb/d in 2Q26 and to decline by 420 kb/d for the year as a whole, which is 1.3 mb/d weaker than than their pre-conflict forecast.

But demand has not fallen enough to end the need to continue using up existing inventory. This can be seen in the global oil balance, which is negative now (supply is lower than demand):

Digging through the details of the IEA’s May 13 report, there are a few things worth flagging:

• The "oil on water" number bounced. After dropping 117 million barrels in March, oil floating at sea actually recovered by 53 million barrels in April. This is because Saudi Arabia and others started rerouting shipments through bypass ports, and Atlantic Basin producers ramped up long-haul exports to fill the gap.

• China is also tapping its reserves, which fell for the first time in six months — down 7 million barrels.

Why knowing all this matters: When buffers start to drop, prices should stay elevated and have the risk of rising even further, something we called out on April 9. If disruptions continue and inventories keep draining, we could be looking at another price spike — and that ripples into everything from airline stocks to consumer discretionary to the broader inflation picture. Holding energy names in your portfolio may not be a bad hedge.

Keep this on your radar.