May 19, 2026 [Supply Chain Digital]- The buffer of oil shipments that masked the Strait of Hormuz closure has run dry, leaving global supply chains facing their largest inventory depletion

The closure of the Strait of Hormuz at the end of February did not cause an immediate supply chain failure because hundreds of tankers loaded with Middle Eastern crude were already sailing towards their destinations. These vessels took weeks to reach terminals in Europe and Asia. As they docked and discharged cargo, the existing pipeline of shipments masked the scale of the disruption.

That buffer is now exhausted. According to the International Energy Agency’s May 2026 Oil Market Report, global oil inventories dropped by 129 million barrels in March and 117 million barrels in April. This is the fastest rate of inventory depletion on record. The IEA released 400 million barrels from its emergency reserves shortly after the US and Israel began the war on Iran but even this intervention has not kept pace with the drawdown.

“That excess supply is now dwindling at a record pace,” says Georgi Kantchev from the Wall Street Journal, “with oil executives and analysts predicting that a harsh reckoning is set to upend the relative calm in energy markets.”

Logistics infrastructure under pressure

The waterway’s closure cut off 20% of global fuel supplies, or more than 14 million barrels per day from the Gulf. According to the IEA, supply losses from Saudi Arabia, Iraq, the UAE, Kuwait, Iran and Qatar have reached 14.4 million barrels per day below pre-war levels. Total losses from the Gulf’s oil producers have already exceeded 1 billion barrels.

The distribution network has been forced to adapt. Saudi Arabia ramped up shipments through its East-West Pipeline, redirecting exports from the Persian Gulf to the Red Sea. The UAE pushed more oil through the Fujairah pipeline to avoid the blockage at the Strait of Hormuz.

These pipelines have finite capacity. The volume of oil that can be rerouted through alternative infrastructure falls far short of normal throughput via the Strait. Qatar’s Ras Laffan production facility, one of the world’s largest oil and gas production hubs, was severely damaged by Iranian airstrikes in March. QatarEnergy has warned that some repairs could take several years to complete. The firm’s Mesaieed facility also sustained critical damage.

Even if the Strait of Hormuz were to reopen in June, the IEA projects that global oil supply will average just above 100 million barrels per day across 2026. That is a decline of 3.9 million barrels per day year on year.

The logistics challenge extends beyond crude oil itself. Refined products including diesel, jet fuel and petrol that normally flow from Gulf refineries have also been disrupted, creating secondary bottlenecks in downstream supply chains.

Alternative supply routes activated

Producers in the Americas have increased output to compensate. The US hit a record crude output of 14 million barrels per day in April. Brazil notched its third consecutive production record. According to the IEA, exports from the Atlantic Basin have risen by around 3.5 million barrels a day since February, redirected urgently towards markets east of the Suez Canal that have been hardest hit.

The response has not been sufficient. Transportation routes have been lengthened as cargoes travel from the Americas rather than the Gulf. Shipping times from the US Gulf Coast to Asia take several weeks longer than from the Middle East. This extended transit time increases working inventory in the supply chain and delays replenishment cycles.

Storage facilities in consuming regions are being depleted faster than they can be refilled. Countries with congested ports and limited storage like Iraq face the most protracted recovery. The IEA notes that it will take two to three months of shipping normalisation before production recovers in earnest, assuming the Strait reopens soon.

Petrochemical feedstock supply chains have collapsed in parts of Asia. LPG and naphtha demand has fallen sharply as Gulf supplies dried up. India has seen household cooking fuel arrivals drop more than 40% from pre-war levels, causing large queues for LPG cylinders. Industrial users dependent on consistent feedstock flows have reduced production schedules or temporarily shuttered facilities.

Demand destruction across sectors

Consumer behaviour has shifted as prices climbed to a record high of US$144.68 per barrel for North Sea Dated crude in April. This surpassed the 2008 financial crash peak. The IEA now forecasts global oil demand to contract by 420,000 barrels per day year on year in 2026, a reversal of 1.3 million barrels per day from its pre-war forecast.

Aviation logistics have been disrupted. Global Revenue Passenger Kilometres fell 0.6% year on year in March, the first decline in five years. Flights passing over the Middle East were delayed, rerouted or cancelled. Airports in Iran, Iraq and Kuwait remained closed in early May.

Motorists around the world responded with panic buying. UK petrol stations saw surges in sales of around 39% in early March. This created temporary spikes in retail demand that strained local distribution networks. Pakistan, the Philippines and Sri Lanka have introduced four-day working weeks. Other nations in Southeast Asia have implemented work from home mandates to save energy.

“If the Strait of Hormuz remains effectively closed and commercial oil inventories continue to be drawn down at their recent pace, that would be consistent with Brent crude oil prices rising towards record highs this summer,” says Hamad Hussain, Climate and Commodities Economist at Capital Economics.

The war is now in its twelfth week and peace talks remain unaligned. The US Department of Defense has acknowledged that clearing sea mines in the Strait of Hormuz could alone take months. The total global oil deficit is projected to reach 900 million barrels by September 2026.

According to the IEA, rebuilding depleted stocks would require approximately one million barrels per day of surplus supply for the next three years, on top of underlying demand growth. The market is expected to remain in deficit until at least the fourth quarter of this year. North Sea Dated was trading around US$110 per barrel at the time of writing.

The supply chain cushion that absorbed the initial shock has been exhausted. Restocking global inventories to pre-war levels will require sustained surplus production and uninterrupted shipping routes for several years. The logistics network that kept oil flowing after the closure has reached the limits of its capacity to compensate.