Shell, Exxon and Chevron Warn Fuel Stocks Are Running Dangerously Low as Hormuz Flows Stay Weak
Big Oil's public alarm over depleted inventories coincides with U.S. gasoline stocks 5% below the five-year average and global refining capacity cut by as much as 10%.
Shell, Exxon and Chevron have all warned that pump prices will stay elevated, joining analysts who flagged the tightness earlier by watching physical markets rather than futures charts. ICE Brent crude front-month was trading at $88.82 a barrel as of 06:02 UTC on Thursday (2026-08-13), having staged only a partial recovery from a sharp sell-off in late July, when diplomatic signals from Washington temporarily eased Hormuz supply fears. The majors' alignment on the outlook marks a harder public stance than any of them had taken individually.5
EIA data show U.S. gasoline stocks sitting 5% below the five-year average, with diesel and jet fuel trailing by 3%. Those are not seasonal fluctuations. They represent inventory erosion that began accumulating as Middle East disruptions throttled crude flows from the Persian Gulf through most of the second quarter, compounding pressure on already-strained refinery input economics.1
Bloomberg reported in the week of 2026-07-27 that wars in the Middle East and Ukraine, combined with China's caps on fuel exports and Russia's ban on diesel exports, have effectively reduced global refining capacity by as much as 10%. That figure reflects simultaneous pressure across multiple supply chains, and it helps explain why physical tightness has proved more durable than futures markets initially priced.5
The Strait of Hormuz remains the axis of the supply problem. Roughly 20% of global seaborne oil trade transits the strait, and flows have remained significantly below prior levels even after U.S.-Iran talks in late July produced some diplomatic progress. NYMEX WTI crude front-month fell 5.7% to $84.23 a barrel and ICE Brent crude front-month fell 6.6% to $90.41 on Monday (2026-07-27), as President Trump described the Iran talks as productive. Intraday, ICE Brent crude front-month fell as much as 10% and NYMEX WTI crude front-month nearly 9% before both recovered partial ground by the close.4
But the physical disruption behind those price moves has not been resolved. The European Central Bank's latest market assessment estimated the recent conflict disrupted around 20 million barrels per day of global supply, roughly one-fifth of worldwide production. Saudi Arabia has been rerouting 5 million barrels a day through its Red Sea terminal, and the UAE has boosted flows through the Port of Fujairah, but those workarounds have limits, particularly given aging infrastructure. Global demand fell nearly 5 million barrels a day in response to higher prices, providing some offset, though that demand destruction is itself an economic cost.3,4
Russia's role is adding a second axis of pressure. Moscow's ban on diesel exports has tightened European distillate supply, and though Russia's Black Sea oil terminal resumed export loadings in late July (2026-07-27), the volume and reliability of those flows remain uncertain. Any renewed disruption there would hit diesel and heating oil markets that are already stretched.4,5
The IEA reported that global oil supply rebounded by 4.1 million barrels per day in June, following a ceasefire, but that recovery has not been enough to refill the stock deficit built up during second-quarter disruptions. The EIA's July Short-Term Energy Outlook estimated average global crude inventory declines of 5.1 million barrels per day through the second quarter. U.S. refineries processed the most crude oil for any second quarter since 2019, when refining capacity was 4% larger — yet product builds have not followed, because export demand pulled barrels out of the domestic market.2
Distillate exports in the second quarter averaged an estimated 1.56 million barrels per day, 30% above the five-year average, while jet fuel exports ran at more than double the five-year average, at 356,000 barrels per day. Those exports were partly a response to European and Asian buyers scrambling for product diverted by Hormuz constraints. The result is that refineries processed near-record volumes and still could not replenish stocks.2
Crack spreads tell the same story. The quarterly average gasoline crack spread in the second quarter was 60% above year-ago levels, with distillate and jet fuel margins also sharply elevated. Heating oil futures held at $4.29 a gallon and gasoline futures at $3.15 a gallon as of Thursday (2026-08-13), reflecting a market where supply is thin enough that any renewed Hormuz disruption, fresh Russian export curbs, or a demand recovery in China could push product prices materially higher before inventories recover.2
Whether Hormuz flows normalise before the northern hemisphere autumn demand season begins drawing on already-depleted distillate and heating oil stocks is the forward variable the market is pricing around. If diplomatic progress stalls and Strait throughput stays below prior levels into September, the inventory buffers that typically absorb seasonal demand peaks will not be there.4,2