Overview
Citi analysts highlighted that the U.S.–Iran conflict and disruptions to the Strait of Hormuz have driven global observed inventory draws of roughly 3 million barrels per day, amounting to 519 million barrels between February and August 2026.
Projected Stockpile Levels
The bank projects that OECD oil stockpiles could decline to about 70 days of cover by the end of 2027. It further estimates that stocks outside China may reach the same 70‑day cover level by mid‑2028, while global stocks are expected to hit this threshold in the first quarter of 2029. Citi noted that a 70‑day cover level mirrors the situation during the second oil shock of the 1970s‑80s, when energy spending was around 8 % of GDP and all‑in oil prices exceeded $200 per barrel, compared with roughly $120 per barrel at present.
Immediate Product‑Specific Strains
Despite the longer‑term outlook, Citi cautioned that the macro picture masks near‑term pressures. It warned that specific refined products, especially diesel, are already under distress and could deteriorate further, potentially triggering localized, product‑specific crises earlier than the broader stockpile projections suggest.
Price Movements and Refining Margins
Brent crude has risen above $93 per barrel and WTI above $86 per barrel, up from early‑August lows of $80 and $75 respectively. U.S. wholesale diesel prices have surged to more than $100 per barrel above WTI, while the weighted refinery margin has jumped approximately 350 % this year to $33.
Base‑Case Outlook
Citi’s base‑case scenario still assumes that a diplomatic deal and the reopening of the Strait of Hormuz will occur in the fourth quarter of 2026, with Brent prices expected to retreat to the $60s in 2027.