Inventory drops to decades low, US oil reserves struggle to cope with US-Iran conflict restart.

The United States' oil reserve system is far from ready to deal with the breakdown of the ceasefire agreement between the United States and Iran, and the resumption of conflict. After President Trump announced a temporary ceasefire in mid-June, international oil prices fell to pre-war levels, and oil tanker traffic in the Strait of Hormuz gradually resumed. However, it will take a long time for crude oil inventories to replenish the gap. According to data from the US Department of Energy, commercial crude oil inventories increased by 3 million barrels in the week ending last Friday, the first increase after ten consecutive weeks of decline. Now that President Trump has announced the termination of the ceasefire agreement, the energy market situation may further deteriorate. Andy Lipow, president of Houston-based Lipow Oil Associates, said, "By the time inventory reaches the minimum operational level later this year, the most worrying situation in the oil market is likely to come true." He said, "Only when oil prices rise and force market demand to shrink, can supply and demand return to balance. Once inventories are completely depleted, there will be no buffer resources available in the market." Energy industry executives and analysts are currently not predicting a re-run of the oil crisis that saw oil prices surpass $100 per barrel this spring, but they warn that if the shipping lanes in the Strait of Hormuz are blocked again - through which about twenty percent of global oil trade passes - US energy security will face serious threats. If the US is forced to continue using strategic reserves of oil, in the event of another global oil supply interruption or natural disasters such as hurricanes impacting the fuel supply chain, the US will lack sufficient reserves for emergency backup; oil prices will rise again, forcing consumers and purchasers to reduce their oil demand.