“You hit the tank on the ground.” Those are the words one oil industry official used to describe the state of the world’s oil industry, in a speech the official said he had already shared with senior officials in Washington. The same person gave an unusually specific deadline: mid-June, according to E&E News.
The White House’s response was swift and direct.
“Politico’s anonymous sources are not correct,” a White House official said, while an Energy Department official added that there were no such discussions about inventory levels, according to E&E News.
Four oil officials told Politico the opposite, and at least two of them have now made similar warnings on the record.
Oil inventory data shows the biggest decline in decades
The conflict stems back to the Strait of Hormuz, which Iran effectively closed following US and Israeli strikes that began on February 28.
The strait normally carries about one-fifth of the world’s oil reserves. The drawdown has been ongoing since the first weeks of the disruption, when the world was already burning stocks at 7.1 million barrels a day.
Global oil stocks now hold about 7.5 billion barrels, a drop of nearly 500 million barrels since the conflict began, falling at a rate of about 5.8 million barrels a day, according to Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy, quoted by E&E News.
Most of that oil already has buyers and isn’t held back, Burkhard said, and inventory in other states could be viable.
Additional Oil and Gas:
On the US side, gasoline installations fell by 47.5 million barrels between the beginning of February and the end of May, the largest February-to-May decline in EIA weekly data going back to 1990, according to OilPrice.com.
The next largest February-to-May drawdown on record was comprised of nearly 30 million barrels, which was established 15 years ago. Separately, U.S. commercial crude stocks fell by 8 million barrels in the latest week, the eighth consecutive weekly decline, leaving the stockpiles about 3% below their five-year average.
What is meant by “tank bottom” in tactical storage
The Strategic Petroleum Reserve has accounted for most of this range. SPR stocks fell by 9.1 million barrels in one week and were 36.2 million barrels below year-ago levels, with the latest drawdown marking SPR’s biggest weekly drawdown in history, according to OilPrice.com.
SPR’s current stock of about 357 million barrels is below its peak capacity of about 725 million barrels.
“I’ve never seen inventory numbers drop so fast,” Burkhard said. “It’s amazing.” His broader point was that the inventory cushion is the reason prices haven’t increased. “What’s remarkable is that prices haven’t gone up so far, and the main reason for that is the release of goods around the world,” said Burkhard. “But that can’t go on forever.”
Exxon and other oil companies are warning of $150 to $160 oil
What separates this warning from the usual anonymous stories is that similar concerns are now being publicly voiced by named executives at major corporations.
Exxon Mobil executive vice president Neil Chapman told an investor conference that benchmark Brent crude could reach $150 to $160 a barrel if supplies continue to decline, comments that came as Exxon’s leadership began to frame the drop in supplies not as a forecast but as what models say will happen next when the cushion runs out.
“Once you get to that point, you’re going to see prices go up,” Chapman said.
“We are raising the alarm about these assets that will be recorded on the ground,” said the head of the American Petroleum Institute Mike Sommers on Fox Business, a program that executives are known to watch closely. “We have to solve this problem in the Strait of Hormuz.”
The warnings extend beyond US oil headlines. Frederic Lasserre, head of research at commodities trading giant Gunvor Group, said in late April that if the Hormuz blockade continued for another month, oil markets would run out of stock and hit “tank bottoms,” according to Fortune.
Helima Croft, global head of commodity strategy at RBC Capital Markets, separately described the spilled storage tanks as an “underwater iceberg” during a Council on Foreign Relations event.
The reason this debate is important beyond Washington politics is the Morris/Getty Images era
That shows the current national average gas price
The national average price of a gallon of regular gasoline stood at $4.26 as of Wednesday, $1.28 higher than before the war, according to AAA data cited by E&E News. That’s down from levels near $4.50 reached a few weeks ago, a decline in management qualities due to market optimism about possible talks to reopen the strait.
UBS has forecast Brent near triple digits until the end of 2026, while Citi has warned that Brent could hit $150 a barrel if Hormuz flows continue to be disrupted in June, a border that is close to the calendar.
The management’s inventory warning is an effective way to follow those bankers’ forecasts: the price has not fully reflected the supply gap because the inventory has drawn, and that absorption capacity is now running out.
Excluding public warnings:
Inventory concerns are not the same for all fuel types or regions. Some of the confidential discussions with administration officials focused on West Coast jet fuel shortages, regional congestion and some products that do not reflect the national fuel average, according to E&E News.
Total U.S. and SPR commercial crude inventories are down nearly 90 million barrels from a recent high, including a 16 million barrel drop in one week, according to a Saxo Bank analysis cited by Energy News Beat.
The warning comes amid a midterm election cycle in which Democrats have built nearly a seven-point lead over voters, meaning gas prices come as more of a political change than an economic one, the Daily Beast reported.
GasBuddy has predicted the most expensive summer at the pump in years, predicting $4.48 around Memorial Day and a summer average of $4.80 if road closures continue, according to Gas Price Survey.
Why the summer driving season drives up oil prices
The reason this debate is more important than Washington politics is timing. The peak summer driving season is when demand for gasoline is at its highest, and it comes at the same time that executives say inventories are at their lowest level on record.
If Brent reaches the $150 to $160 range described by Chapman, the gap between current pump prices and what the supply figures suggest will close quickly.
The disagreement between the industry and the White House isn’t really about whether rates can go up. It is about how much warning the public should be given before doing so.
Administrators argue that the safest message right now is to prepare Americans for higher prices. The management’s position is that to do so risks becoming a self-fulfilling prophecy.
White House spokesman Taylor Rogers added a specific prediction to the same statement cited by the Daily Beast, saying that gasoline prices will “fall back to multi-year lows” once the conflict reaches a successful conclusion. Whichever draft proves to be accurate will likely become clear by mid-June with both sides now watching.
Related: Exxon CEO delivers blunt message on oil prices and economy
This story was originally published by TheStreet on Jun 14, 2026, where it appeared first in the Economy section. Add TheStreet as a favorite source by clicking here.
