With no agreement restoring passage through the Strait of Hormuz, global oil
inventories have fallen to dangerously low levels. JP Morgan warns that unless
transit is normalized, oil could surge again in late June. U.S. crude stocks
have declined for eight straight weeks to their lowest since Feb 2024. Analysts
say the second-round price shock risk stems from the depletion of buffer stocks
rather than a formal closure; investors see the Strait as a persistent
geopolitical bottleneck and expect prices to remain above $70 even if tensions
ease. Higher oil is a modest headwind for U.S. growth but poses greater
inflationary risk for Europe and Asia; if crude averaged $120/bbl for a year,
growth in the U.S. could slow by roughly 0.4 percentage point.
