The Largest Oil Draw in 44 Years (And Why Next Week Will Be Worse)

You may be too young to remember the Suez crisis. 

At the time, the Suez Canal was a critical chokepoint for global shipping, handling up to 15% of the world’s maritime trade and nearly one-third of container traffic. 

What you may not know is that even after a ceasefire was brokered and the conflict officially ended, the Suez Canal remained closed to commercial shipping for 169 more days. 

You see, Nasser had ordered 40 ships scuttled in the channel to block it, and it took more than five months to clear the obstacles. 

As you might expect, oil prices at the time doubled as the crisis set it. 

History seems to have a little knack for repeating itself. 

When Operation Epic Fury was launched at the end of February, it triggered the most violent disruption to global oil flows since the 1979 Iranian Revolution. 

The Strait of Hormuz — through which 138 tankers transited every single day of 2025 — went to effectively zero, and with two blockades in effect and a pair of bickering parties stubbornly grasping to their non-negotiables for a peace deal. 

I’ve been telling you since the first bombs fell that there would be a point of no return in this conflict — the point at which the supply damage is already baked into future oil flows. 

But there’s a catch.

See, nothing — not a presidential tweet, not an IEA emergency release, or even a real peace agreement signed tomorrow — can fix things. 

We crossed that point last month.

And this week’s brutal inventory draws are just the beginning of the real pain. 

When the EIA released its weekly oil report on Wednesday, it showed the single largest combined weekly draw on U.S. commercial petroleum stocks (including the SPR) in the entire history of the EIA’s reporting series — a series that began in October of 1982.

And the part that most people don’t realize is that this historic draw is something we’re all going to have to get used to, because it’s going to be monster draws from here on out. 

Let’s walk through the numbers.

For the week ending May 15, U.S. commercial crude oil inventories fell by 7.9 million barrels (by the way, the consensus forecast was 2.9 million barrels); that brought total commercial crude to 445 million barrels, roughly 2% below the five-year average for this time of year. 

Not only did we see products like gasoline fall to 5% below its five-year average, but total commercial petroleum inventories dropped a combined 9 million barrels on the week.

And then there’s the Strategic Petroleum Reserve.

The SPR — which President Trump began releasing in 120-day tranches back in March — bled 9.9 million barrels in a single seven-day period. 

That on its own represents the largest single-week SPR drawdown the EIA has ever recorded. 

In case you’re wondering, the SPR now sits at 374.2 million barrels — the lowest level since July 2024 — and it’s still falling. Folks, this is why we were so critical of President Biden’s massive SPR release in 2022, when there wasn’t a global supply crisis. 

The 172-million-barrel release Trump authorized in March has roughly 50 days of delivery left, and the 400-million-barrel coordinated release from IEA member states is still flowing. 

In other words, the emergency taps are wide open right now.

Add it up, and we get a combined draw of nearly 19 million barrels per day in a single week. 

Of course, it’s the second consecutive week of historic draws.

Now here’s the scary part — we’re going to see another one of these next week. And the week after that. And the week after that. 

Back to back to back, for the next four to six months. Minimum.

And here’s why the draws are locked in…

The Strait of Hormuz carried roughly 21 million barrels per day of crude and refined products in a normal year, which you and I know is roughly 20% of global oil supply.

Prior to this war, 138 tankers transited the strait daily. Since May 6th, that number has been near zero. 

Iranian crude exports collapsed from 1.85 million barrels per day in March to about 567,000 in recent weeks — a 70% cut. Tehran has been voluntarily shutting in another 300,000 to 500,000 barrels per day because its 65-to-75-million-barrel floating storage fleet is nearly full. 

Meanwhile, Iraq, Saudi Arabia, Kuwait, UAE, Qatar, Bahrain — all either shut in or severely restricted output. In fact, total Middle East shut-ins hit 10.5 million barrels per day in April. That’s not coming back online in a matter of weeks. 

The current belief is that if a peace deal were put in place TODAY, it would take at least four months to return flows back to 80% of pre-war levels; full flows wouldn’t return until the first half of 2027. 

Remember, that’s if the entire conflict ended today, and both sides fully agreed to a set of peace terms. 

You and I both know that’s not the case. Even now, the two sides need another week to argue about terms, and then another month to negotiate — and that’s optimistically assuming they’ll agree to anything at all after the month is over. 

Neither side has given us a reason to think they can play nice. 

Of course, the oil that didn’t load in April can’t arrive in June, and the oil that isn’t loading in May can’t arrive in July. That means the oil that should be loading in June for August delivery also won’t happen. 

This isn’t a forecast, it’s the reality of those physical barrels never making it to market. 

Meanwhile, global oil stockpiles are getting close to an eight-year low. 

In March 2026 alone, the world drew down 85 million barrels of crude; stocks outside the Middle East Gulf were drawn down by a massive 205 million barrels — 6.6 million barrels per day — as tanker traffic through the Strait of Hormuz was effectively choked off. 

While some floating storage built up in the Middle East and China added crude to tanks, the net global loss was significant, and certainly not sustainable long-term.

Refineries in Asia, which happen to be the largest consumers of Gulf crude, are drawing down inventories because the oil they ordered in March never arrived. 

Now they’re buying from Atlantic Basin producers, paying premiums, and cutting run rates where they can’t secure supply.

All this as two thousand ships remain stranded in the Gulf, waiting to be allowed through. 

They’re not moving.

Now look at the recovery timeline nobody’s pricing in…

The U.S. says it will take six months to clear mines it believes have been laid by Iran. That’s six months minimum once hostilities end. 

Again, if a peace deal is signed tomorrow — literally tomorrow — the most optimistic recovery projections put Strait of Hormuz flows back at only 80% of pre-war volume by September, with full normalization as late as the second quarter of 2027. 

You tell me if you honestly think this optimistic case is warranted. 

There’s just too many assumptions. Assumptions over ceasefire talks, mine-clearing operations that proceed without incident, tanker captains willing to return, and of course, the false assumption that refiners can ramp production back up without delays. 

Someone remind me again what the definition of insanity is?

Perhaps the most damaging part in all of this are the manipulative headlines that have been desperate to keep a lid from surging crude prices. 

Do you think it was a coincidence that a headline boasting about a peace deal being close came just 15 minutes before the EIA report showing a historic inventory withdrawal? 

Whether it’s a Truth Social post hinting at negotiations, a Reuters wire about a “diplomatic channel reopening,” or a backchannel leak from an unnamed Gulf official — every one of those headlines triggered a $5-to-$10 selloff in the front-month contract.

Yet, none of them changed the physical barrel by a single drop.

The reason this is so damaging is because it delays the demand destruction that naturally occurs from extremely high prices. 

Remember, the cure for high oil prices IS high oil prices. 

Still, the opportunity here is enormous.

U.S. and Canadian producers are sitting on the cheapest free cash flow yields the energy patch has shown since 2020. 

Drillers are being priced as if $80/bbl oil is the ceiling, not the floor. Royalty trusts, midstream operators with non-Strait routing optionality, and refiners with light/heavy spread leverage are all trading at numbers that will not survive the next three weekly EIA reports — let alone the next sixteen.

This is the cleanest setup the oil sector has handed us in five years — and the broader market is too distracted by tweets to see it.

We’re not just approaching a cliff for this oil crisis, we’ve already jumped.

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