Global oil stockpiles are projected to decline to roughly 70 days of cover by the end of 2027, according to a Citi note distributed to clients on Thursday. The decline reflects observed inventory draws of about 3 million barrels per day, totaling 519 million barrels between February and August 2026, as demand outpaces supply amid geopolitical and logistical constraints.
The warning underscores growing strains in refined product markets, particularly diesel, where U.S. wholesale prices have surged to more than $100 a barrel above WTI crude. Brent crude has climbed back above $93 a barrel from early August lows near $80, while WTI has risen above $86 from around $75. Citi’s weighted refinery margin has ballooned around 350% this year to $33, signaling tight refining capacity and elevated processing costs.
Analysts estimate that OECD stockpiles could reach the 70-day threshold by the end of 2027, with ex-China inventories hitting that level by mid-2028 and global stocks following in the first quarter of 2029. The projections echo conditions last seen during the oil shocks of the 1970s and 1980s, when energy spending reached roughly 8% of GDP—a threshold equivalent to all-in prices above $200 a barrel, compared with current levels near $120.
Citi cautioned that immediate pressures are already evident in refined products, warning that localized product-specific crises could emerge sooner than the broader inventory projections suggest. The bank’s base case assumes a potential easing of tensions in the Strait of Hormuz and a reopening of Iranian exports by the fourth quarter, which could stabilize markets. Under this scenario, Brent crude is expected to return to the $60s by 2027, though risks to the outlook remain skewed to the upside.
