Time to start thinking about global oil reserves - updated

I'm embedding a graphic I found in a May 2 Facebook post by Christian Decle (who apparently is a "digital creator.")  It's a slightly blurry probable screencap of a report from J.P. Morgan written by Natasha Kaneva last week.  I tried to track the original and found her on various J.P. Morgan web pages, but haven't seen the original report, which may have been distributed privately to clients.  

I've added two annotations of my own.  The first is a red arrow noting the point in the graph where the global oil inventory changes from current to projected future, extrapolated on the downward slope for the last couple months, and assuming the global drawdown stays unchanged at 5.5 million barrels per day (second annotation, circled).  I inserted the arrow because the color change from purple to green is subtle, and I wanted to note that the curent level is not critical - it is about the same as ten-year averages - but the steepness of the recent fall reflects an unprecedented severity of disruption and will quickly become critical if it continues.

This topic has been discussed repeatedly on the Bloomberg business televaion channel by hosts interviewing various specialists in business and economics.  Everyone wants to know what is going to happen, and there are a lot of assumptions that need to be made.

The author of the Facebook post concludes by saying "The UK has a fuel reserve buffer — measured in days."  I have no idea whether that is true.

But it is true that after Trump made the yet-unproven claim that the U.S. was escorting ships through the Strait of Hormuz, Iran did launch some drone or missile attacks on the U.A.E., which damaged a refinery and threatens the U.A.E.'s route of bypassing the Strait via a pipeline to the Indian Ocean.  Brent crude is now back at highs, and no resolution is in sight.  

Addendum:  This update posted yesterday in the Financial Times:

Global oil reserves plunged at a record pace in April, as the conflict in the Middle East strains supplies and raises the risk of a further sharp jump in prices ahead of the summer travel season.

Stockpiles of crude fell by nearly 200mn barrels, or 6.6mn barrels a day, estimated S&P Global Energy, even as higher prices triggered a collapse in demand of about 5mn b/d, the sharpest ever fall outside of the Covid-19 pandemic. 

“This is massive, it is far above the usual range,” said Jim Burkhard, head of crude research at S&P, adding that in a normal month, global stocks fluctuate by between a few hundred thousand and a million barrels. “An inevitable market reckoning is coming,” he said...

Despite average pump prices nearing $4.50 a gallon, US drivers have yet to significantly curb consumption, according to Morgan Stanley. The bank estimates that one in every 11 barrels of oil is used by American motorists and forecasts that US inventories could fall below 200mn barrels by the end of August, the equivalent of roughly one week of demand...

He said a sharp drop in US stockpiles could be the trigger for wider alarm. “The worst of the crisis is ahead of us,” he said.

Note the drawdown of reserves is not decreasing, even despite some demand destruction.  This morning American equity market futures are trending up, based on anticipated rising earnings from the controversial AI sector and on the assertion from Trump that there are hopes for "a deal", when what he wants is total surrender by Iran of their nuclear material and their sovereignty, and what they want is retention of the enriched uranium plus control of the Strait plus reparations for damages incurred to date.  A "compromise" between those two viewpoints is an utter fantasy.  I have to add the mandatory "IMHO", so do your own research.

Addendum:  Here is an updated (May 9) detailed discussion of world oil reserves.