We haven't heard much about oil reserves lately. I'm sure everyting's fine.

Remember a little over three weeks ago when we ran a post about CNN's report on the oil reserves in Cushing, Oklahoma. We used this as an example of how highly important aspects of a major news story like the war in Iran, while not ignored, are covered only sporadically, while relative trivia runs constantly.

The CNN article was very good, but in the weeks that followed, other news organizations largely ignored it. Week after week, non-stories, often involving some unsupported and highly unlikely claim from the White House or yet another analysis of the quagmire, ran constantly at the top of the fold in the New York Times and its competitors.

Unless you were making a concerted effort to dig into the numbers, you could easily get the impression that an uptick in traffic through the Strait of Hormuz and other measures had brought the world's oil supply, if not back to where it had been, then at least well out of the danger zone.

You would be wrong.

From the Financial Times:

The International Energy Agency on Friday said its member countries had released almost three-quarters of the planned 400mn-barrel emergency stock release that was announced in March, meaning there are only a few more weeks to go before those supplies to the market dry up.

“We’ve burned through all of the buffers we had. Everything,” said one trader. “All of that’s now gone.”

...

    During the four-month closure before last month’s US-Iran agreement to reopen the strait, governments in the west and Asia pulled almost every lever available to them to ensure the supply crunch did not undermine the world economy.

Western powers released record volumes of strategic oil reserves, China cut its oil imports in half and made its state-backed companies pull fuel from inventories, while the White House let it be known the US could, in theory at least, intervene in futures markets if prices got out of hand.

The result was that Brent crude peaked at $126 a barrel in April, well below its all-time high, despite the IEA warning that the world was experiencing the worst supply disruption in history.

But traders said that if the renewed closure of the strait lasts for months, with some suspecting Iran wants to keep the pressure on Trump ahead of the November midterm elections, it is not clear this time where the oil to make up the shortfall would come from.

Amrita Sen, director of market intelligence at Energy Aspects, said that going into the war, the oil market had roughly 400mn barrels of excess inventories, not including strategic reserves controlled by governments.

“Now we have close to nothing,” she said. “Market complacency around Hormuz flows is being severely tested.”

 ...

    “Ultimately, the market was pricing an optimistic flow trajectory that now is clearly not on the table, at least . . . not until we get another round of diplomacy,” said Joel Hancock, a senior commodities analyst at Natixis Bank.