The oil industry is sounding the alarm to the Trump administration that draining global petroleum inventories could send energy prices surging within weeks, according to four industry executives.
Executives have flagged the issue to senior White House officials and Cabinet members in recent weeks as part of the administration’s ongoing dialogue with the U.S. energy sector.
Iran has effectively closed the Strait of Hormuz since the U.S. and Israel launched military strikes three months ago, triggering what has become the largest disruption in crude oil flows ever recorded.
Countries have been drawing down oil and fuel storage reserves to compensate for the loss of Middle Eastern supply, but inventories are now running dangerously low.
“We’re at dangerously low levels already,” said one industry executive granted anonymity to discuss private conversations with the administration.
“We have shared those concerns at the highest levels of government about what’s coming in mid-to-late June,” the executive said. “I hope they are paying attention to inventories right now. You’re hitting tank bottom.”
Some conversations have focused on tight inventories of specific fuel types in particular locations, such as jet fuel on the West Coast, according to a second person involved in the discussions.
The national average price for a gallon of gasoline stood at $4.26 as of this week, even as President Trump has continued to characterize the disruption as temporary.
A White House official denied that senior staff had received any private industry warnings about inventories, stating: “Politico’s anonymous sources are wrong.”
White House spokesperson Taylor Rogers said in a statement: “President Trump and his energy team anticipated short-term market disruptions, communicated them openly to the American people, and implemented an aggressive plan to mitigate any impacts.”
The administration has pointed to record-high U.S. oil production, new supplies from Venezuela, and Jones Act waivers allowing foreign-flagged ships to deliver between U.S. ports as protective measures for American consumers.
Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy, noted that inventories have so far acted as a buffer against even higher prices.
“What’s been remarkable is that prices have not moved higher so far, and a big reason for that is the inventory cushion around the world,” Burkhard said. “But that can’t go on forever.”
Exxon senior vice president Neil Chapman, speaking at an investor event, warned that dated Brent crude could climb to $150 or $160 a barrel.
“Once you get to that point, then you’ll see prices shoot up,” Chapman said, underscoring the severity of what analysts fear may be coming.
Worldwide stocks are currently holding around 7.5 billion barrels, down approximately 500 million barrels since the conflict began, with one expert telling the Council on Foreign Relations this week that drained storage tanks represent an “iceberg under the water.”
Early in the conflict, some forecasters had predicted prices could reach as high as $200 a barrel, given that roughly 20 percent of global oil flows through the Strait of Hormuz.
The closure has also triggered global shortages in fertilizer, threatening food supply chains, with American farmers already passing higher input costs on to their customers.
A YouGov survey found Trump’s net approval rating has fallen to -25, the lowest the polling organization has recorded for any president since it began tracking in 2009.
A separate NPR survey found more than 8 in 10 Americans say fuel costs are squeezing their finances, with a strong majority placing the blame directly on the president.
