Oil markets in Asia have reached critically low inventory levels, with Europe likely to face similar strains within weeks and the United States potentially dealing with shortages by July, according to Jeff Currie, chief strategy officer of energy pathways at Carlyle.
Currie made the comments Monday on the sidelines of the UBS Wealth Conference in Singapore, warning that headline global inventory figures can be misleading because much of the stored oil cannot be used immediately. A large portion is required to keep pipelines and storage systems running safely, he said, leaving only a smaller share available for the market.
Global oil markets have been under strain since the outbreak of the Iran war earlier this year, after disruptions to shipping through the Strait of Hormuz sharply curtailed energy exports from the Middle East. "We've seen explosive prices on products. Jet fuel has come down, but diesel has now gone up above jet fuel. So, the problem here in Singapore continues. It just moved from jet to diesel," Currie said.
Asia is already close to these so-called minimum operating levels, Currie told CNBC. He added that Europe could begin seeing similar strains within weeks as the current relief from U.S. oil flows may prove temporary and as the summer driving season starts. "I would say, Asia, you're there. Europe, give it about another month, and look for July being a problem in the U.S.," Currie said.
All of the inventories drawing out of the United States from the U.S. Strategic Petroleum Reserve are being exported into Europe, according to Currie. "The Europeans think they have no problem because they're getting all of this oil being imported from the United States, but that can't continue on," he said.
His comments come on the back of recent warnings by the International Energy Agency that the global oil market could face a critical supply squeeze during the peak summer consumption period, especially if Middle Eastern exports fail to recover and inventories continue falling. IEA chief Fatih Birol cautioned last week that "We may be entering the red zone in July or August if we don't see that there are some improvements in the situation."
Currie dismissed proposals such as suspending the U.S. federal gasoline tax as insufficient to address the underlying supply crunch. "That doesn't solve any of the problems. The only way you solve this problem is to increase the availability of molecules," he said, referring to physical oil supply. While releases from the U.S. SPR have provided some relief, Currie said market pricing suggests underlying shortages remain acute.
Ultimately, reopening the Strait of Hormuz remains the only lasting solution, though even that would take time to normalize markets, Currie said. Shrinking global inventories are also strengthening Iran's leverage in ongoing negotiations, he argued.
U.S. President Donald Trump on Sunday asked his team to not agree a deal with Iran in a hurry to end the war and reopen the Strait of Hormuz. "Every day that goes by, Iran's negotiating leverage compounds. Why? Because inventories of oil and inventories continue to drop," Currie said. "The minute you think you won, that's exactly when you know you probably lost, and their negotiating position at this point has never been stronger in the last 47 years."
The warnings come amid broader concerns about energy security as the conflict in the Middle East shows no immediate signs of resolution. Shipping disruptions through the Strait of Hormuz have already led to sharp reductions in exports from key producers, tightening supplies worldwide.
Market analysts have noted that product prices, particularly for diesel, have shown unusual volatility in recent weeks as refiners struggle to meet demand. In Singapore, the shift from jet fuel pressures to diesel shortages highlights how the crisis is evolving across different fuel types.
European officials have so far expressed confidence in their supply situation due to increased imports from the United States, but Currie's assessment suggests this buffer may be short-lived. The start of the summer driving season is expected to add further pressure on inventories across the continent.
In the United States, the drawdown of the Strategic Petroleum Reserve has helped ease immediate concerns, yet underlying market signals point to persistent tightness. Currie emphasized that only additional physical supply can truly resolve the situation.
Negotiations to end the conflict and restore normal shipping through the Strait of Hormuz continue, though both sides appear cautious about rushing into an agreement. The leverage dynamics described by Currie could influence the pace and terms of any potential deal in the coming weeks.