By Global oil inventories are plunging and may not recover until late 2027, as the Iran war and the closure of the Strait of Hormuz threaten to trigger physical shortages across Europe within weeks, according to a CNBC report.
Analysts warn that even a swift reopening of the key shipping route will not prevent months of supply stress, with Brent crude already hovering near $111 a barrel.
Europe faces looming shortages
Global oil markets are operating under what strategists describe as a veneer of stability, masking deep structural strain.
According to the report, inventories are falling at a pace unseen since the 1970s oil crisis, and physical shortages could hit Europe any day now.
Jeff Currie, executive co-chairman at Abaxx Commodity Exchange, told CNBC’s Squawk Box Europe that the severity of the supply crunch is not yet reflected in prices or policy responses.
Once the shortages hit, prices will go non-linear,” he said. “Then we find out what the willingness is of somebody to pay for that last molecule.
Currie noted that the market is currently in its shoulder months, a seasonal lull between winter heating demand and summer driving season, but that lull is ending.
With the US Memorial Day and the UK’s spring bank holidays approaching, demand for diesel, gasoline, and crude is set to surge.
“That’s when you’re going to begin to feel it,” he warned.
The Strait of Hormuz bottleneck
Flows through the Strait of Hormuz, which normally account for about one-fifth of global oil and gas supply, have been severely constrained since the US-Iran conflict erupted on February 28.
Analysts at Société Générale, led by Mike Haigh, said that even if the Strait reopens by early June, the complex logistics of tanker transit, discharge, refining, and distribution mean a delay of at least 52 days before normal supply resumes.
That lag leaves several million barrels per day offline, forcing refiners to draw down already depleted inventories.
A reopening in late June would bring deeper and more prolonged stress, pushing physical relief into late August and delaying meaningful normalisation until September.
Haigh’s team warned that if the reopening is delayed further, oil prices could spike toward $150 per barrel and remain elevated for the rest of the year.
“Even as flows resume, the delayed timing embeds a deeper inventory deficit, prolonging tightness into 2027,” the analysts wrote.
Prices rising, negotiations stalled
Oil prices had ticked higher earlier on Monday as negotiations between Washington and Tehran appeared deadlocked.
Brent crude rose 1.4% to $110.73 per barrel, while West Texas Intermediate (WTI) gained 1.3% to $106.86.
Currie said the situation is deteriorating faster than policymakers realise.
“Anybody who gets their hands dirty in this business is telling you this is bad,” he said.
“The Iranians want to inflict pain. It’s not the price of oil that matters here it’s the availability of oil.”
The International Energy Agency (IEA) echoed those concerns, warning that global stockpiles are “rapidly depleting” and that the world could face a sustained supply deficit lasting into 2027.
Broader economic impact
The potential shortage comes as Europe’s manufacturing and transport sectors are already grappling with high energy costs.
Analysts fear that a prolonged oil squeeze could reignite inflation across the eurozone, forcing central banks to keep interest rates higher for longer.
Even if the Strait of Hormuz reopens soon, the physical bottlenecks in refining and shipping mean the recovery will be slow.
“The system is acutely stressed,” Société Générale said.
“Only a small share of global stocks is truly usable without pushing the system into operational stress.”
With inventories plunging and geopolitical tensions showing no sign of easing, strategists now see 2027 as the earliest point for full normalization of global oil supply.
For Europe, the next few weeks could mark the start of a physical shortage that tests the resilience of its energy infrastructure.
The Iran war’s oil shock is not just about price it’s about availability.
And as Jeff Currie put it, the world may soon find out what it truly costs to secure that last molecule of oil.
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