Analysts Warn Oil Could Spike Again as Inventories Hit Lowest U.S. Level Since 1985
Updated
Updated · OilPrice.com · Jul 7
Analysts Warn Oil Could Spike Again as Inventories Hit Lowest U.S. Level Since 1985
3 articles · Updated · OilPrice.com · Jul 7
Summary
Oil has fallen back toward pre-war levels on expectations that Strait of Hormuz flows will normalize and Brent could slide to $60 by year-end, but analysts say the market remains vulnerable to another sharp jump.
Multi-decade stock drawdowns are the main risk: U.S. crude inventories including the SPR are at their lowest since 1985, while emergency releases and disrupted Hormuz flows drained buffers almost everywhere outside China.
That leaves prices highly sensitive if U.S.-Iran talks stall, because the mid-June memorandum is only a framework for a possible deal by end-August and Iran still seeks leverage over Hormuz transit.
China's seaborne crude arrivals fell to just over 6 million bpd in June—the lowest since at least 2016—but analysts expect buying to recover gradually, adding demand as countries rebuild depleted stocks.
The broader outlook is a market pulled between a likely 2027 glut and near-term fragility, with low inventories making any sanctions shift, shipping disruption or diplomatic reversal more likely to trigger a spike.