Oil Reserves Face Hormuz Test – Expert Sounds Alarm

A partial reopening of the Strait of Hormuz could give the battered global energy system breathing room — but not instant relief. Oil expert Andrew Lipow told America Report that oil reserves, including strategic government stocks and commercial inventories, could be rebuilt “over the next year or two” if the waterway fully reopens and Middle East production rises again.

Oil Reserves Could Recover

The Strait of Hormuz remains the world’s most important oil chokepoint. The U.S. Energy Information Administration says it handles roughly one-fifth of global petroleum liquids consumption, making every delay, mine threat or tanker attack a market-moving event. Lipow said the world entered the conflict with a surplus of roughly 1 to 2 million barrels per day, but the war changed the balance fast.

“If the Strait were to fully reopen, the global oil reserves, including strategic stocks and commercial inventories, could be refilled over the next year or two,” Lipow said. He added that a complete reopening, combined with higher Middle East output, “could return the world to a surplus situation in 2027.”

That view matches the broad direction of recent market forecasts. The International Energy Agency said global supply is set to fall sharply in 2026 before rebounding in 2027, while Reuters reported the agency sees a significant 2027 surplus if Hormuz flows recover.

Oil Reserves Not Critical Yet

Lipow warned, however, that the current situation is still tight. “With the continued drawdown of Strategic Petroleum Reserves and commercial inventories, the supply situation is becoming tight, but we are not at critical levels,” he said.

That distinction matters for consumers. Tight markets raise prices slowly and painfully. Critical markets create sudden spikes. The U.S. Strategic Petroleum Reserve stood at 411 million barrels at the end of 2025, equal to about 125 days of U.S. crude oil net imports, according to the Energy Department.

One factor has helped delay a sharper shock: China. Lipow said weaker Chinese demand and a “significant reduction in purchasing crude oil” have postponed the moment when prices must spike to force demand lower. In plain terms, China’s slowdown has softened the blow for now.

But Europe remains exposed. If the Strait closes for an extended period and commercial inventories fall to minimum operating levels, Lipow said oil could spike to “$120 per barrel.” That would hit Germany and other European economies through diesel, gasoline and kerosene.

“This is simply bad news for Europe,” Lipow said. “Diesel prices are likely to lead prices higher, occurring at the same time Russia turns into a fuel importer.”

That warning comes as Russia’s own fuel system shows stress. Reuters reported that Moscow has banned diesel exports until July 31 and will begin importing fuel in July after refinery damage and domestic shortages. Diesel and gasoil exports have already fallen sharply, tightening the global market.