JPMorgan Warns of Potential Refinery Shutdown Risks in September
JPMorgan's latest research predicts that if the Strait of Hormuz remains blocked, global OECD commercial crude oil inventories will reach operational limits in September, potentially causing widespread refinery shutdowns due to raw material supply disruptions.
The JPMorgan analyst team, led by Natasha Kaneva, estimates that while global crude oil inventories are as high as 8.4 billion barrels, only about 800 million barrels are truly usable as "operational buffers"; as of April 23, approximately 280 million barrels of this buffer have been consumed, leaving about 500 million barrels available.
OECD commercial crude oil inventories have decreased from 2.8 billion barrels in February to the current 2.72 billion barrels, and JPMorgan expects this to further drop to about 1.6 billion barrels in September, equivalent to only 35 days of demand coverage, nearing the minimum level required to maintain the normal operation of the global refining system.
The report likens this critical point to "low blood pressure" in the human body— the system does not collapse due to complete depletion of crude oil, but rather due to reduced pipeline pressure, deteriorating port loading and unloading efficiency, and refineries being unable to timely obtain raw materials, leading to various segments "suffering from lack of blood" and halting operations.
The supply gap stems from a reduction of about 10 million barrels per day in the Middle East and disruptions in transportation through the Strait of Hormuz. The U.S., Japan, and South Korea have coordinated the release of strategic reserves to offset the gap, but the rate of buffer consumption is still accelerating, with commercial inventories declining by about 2.2 million barrels per day.
From a market mechanism perspective, once inventories breach operational limits, prices will replace inventory adjustments as the main balancing mechanism, meaning that the demand side will be passively "rationed" through higher oil prices rather than relying on restocking to absorb shocks; this will benefit those holding long positions in crude oil futures and independent refineries with scarce refining capacity, but will directly impact downstream refining enterprises that rely on stable raw material supplies.
JPMorgan assesses that the Strait of Hormuz "will reopen before September, no matter what," not based on political optimism, but on the realistic calculation that supply must be restored before system collapse—otherwise, the world will face an unprecedented energy crisis and even economic recession.
Source: Public Information
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JPMorgan's commodity team, long led by Natasha Kaneva, has repeatedly issued inventory warning reports during escalations in geopolitical conflicts (such as the early stages of the 2022 Russia-Ukraine conflict and the 2023 Red Sea shipping crisis). Their model is known for its pessimistic bias, emphasizing "physical limits" rather than purely price logic, and has historically accurately predicted windows of severe oil price volatility.
JPMorgan itself holds positions related to crude oil and refined products on its commodity trading desk, and the release of its research reports is often accompanied by repricing of volatility and spread contracts by its market-making department; meanwhile, the U.S. Department of Energy has coordinated the release of strategic petroleum reserves, with Japan and South Korea following suit, as funds and physical resources flow from strategic reserves to the commercial market to fill the gap. This resource redistribution path itself is an important signal for hedge funds and refining companies to adjust their positions.
This situation is similar to the "forced squeeze" commodity markets before the 2008 financial crisis—when physical delivery capacity was exhausted, leading to severe distortions in the futures contango structure; the current oil industry is in a phase dominated by "physical constraints dictating pricing," unlike previous loose cycles driven by weak demand or overcapacity, marking a rare supply-side hard constraint phase in over a decade.
Essentially, this is a restructuring of the supply chain—when operational inventories fall below a safety threshold, the global crude oil distribution logic will shift from "price discovery" to "physical rationing," with entities controlling strategic reserves, refining capacity, and maritime transport capabilities gaining actual pricing power far exceeding that of financial positions, while small and medium-sized refineries lacking inventory buffers or raw material diversification capabilities will face the highest risk of shutdown, potentially increasing industry concentration.
ABAB News · Law of Cognition
When inventories hit bottom, price is the true rationing certificate.
The system does not collapse due to depletion, but due to a sudden drop in pressure.
Scarcity is not a disaster; it is the beginning of a redistribution of power.