en.Wedoany.com Reported - Inventories at Cushing, Oklahoma—a storage hub known as the "world's pipeline crossroads"—are rapidly declining across its approximately 400 oil tanks. Global refiners are drawing large volumes from the site to compensate for supply disruptions caused by the Middle East war. Cushing, one of the world's largest oil storage hubs, has seen its stockpiles shrink sharply since Iran effectively shut down tanker traffic through the Strait of Hormuz.
Refiners worldwide are scrambling to secure crude oil to ensure fuel supplies, replacing the 20 million barrels per day that had transited the Strait of Hormuz before the war. Since the conflict began, global supply has lost over 1 billion barrels. Cushing holds special significance in global markets as the delivery point for West Texas Intermediate (WTI) crude, one of the world's benchmark oil contracts. Its inventory levels influence the prices of hundreds of billions of dollars in daily oil futures trading.
According to two sources, refiner Phillips 66 believes Cushing inventories may be approaching their operational minimum. For Phillips 66 and several other U.S. refiners, Cushing is a primary crude source for their refineries in the Midwest agricultural belt and along the Gulf Coast export hub. The sources requested anonymity as they were not authorized to discuss internal market forecasts. Phillips 66 declined to comment.
U.S. government data shows that as of May 29, Cushing inventories fell to 22.4 million barrels, down about 4 million barrels from February 27 (the day before the U.S.-Israel conflict with Iran began). Data provider AlphaBBL, using drone, aircraft, and satellite measurements, estimated that inventories dropped another 500,000 barrels between May 29 and June 2. Jeremy Irwin, global crude oil director at analysis firm Energy Aspects, said Cushing inventories could face operational challenges when falling below 20 million barrels. Government data shows this level has not been reached since the U.S. lifted its oil export ban in 2015. According to the Energy Information Administration (EIA), Cushing's effective storage capacity is approximately 78.4 million barrels.
Irwin noted that at operational minimum levels, oil in tanks may be insufficient for pumping, transfers between tanks become difficult, and blending poses challenges, potentially leading to delays or disruptions in Cushing's oil outflows. Some tanks have bottom outlets for complete drainage, while others do not, making residual oil hard to extract. In recent weeks, as U.S. exports surged to record levels, other U.S. storage hubs have also seen massive inventory drawdowns. Driven by Middle East crisis boosting demand from Asian and European refiners for U.S. oil, U.S. crude exports hit a record high of 5.6 million barrels per day in May. Overall, U.S. crude inventories have declined for six consecutive weeks. Since the war began, both commercial stocks and the Strategic Petroleum Reserve have been significantly depleted, with total inventories falling by 63.9 million barrels, or 7.5%, to 43.4 million barrels.
Over the past two decades, Cushing's direct impact on global oil prices has diminished due to rapid production growth in other U.S. regions, particularly neighboring Texas. However, its strategic location allows it to receive crude from top U.S. shale fields and Canada, with hundreds of tanks connected to pipelines supplying refineries in the Midwest and South, as well as export ports on the Gulf Coast. Midwest refiners, which lack access to seaborne imports, are most affected when Cushing inventories fall to operational minimums. Crude quality issues have also raised concerns, as water and sediment often settle at the bottom of storage tanks, making that oil unsuitable for refiner or exporter quality standards. Poor crude quality or procurement problems could drive up refiner costs, ultimately passed on to consumers. U.S. motorists are already paying the highest gasoline prices in years, while soaring diesel costs are worrying Midwest farmers.
Executives from two major U.S. oil companies, Exxon and Chevron, warned at a conference about the rapid global inventory decline and the risk of a significant oil price spike in the coming weeks. Chevron CEO Mike Wirth said at the Bernstein conference in New York that buffers and shock absorbers are being gradually depleted, and the market's ability to absorb such imbalances has sharply declined. He expects greater upward pressure on oil prices heading into June and July.
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