Global oil markets could be heading towards a major crisis, with noted commodities expert Jeff Currie Jeff Currie, Chief Strategy Officer of Energy Pathways warning that the current surge in oil prices is only the beginning of a much larger shock. According to Currie, the world is currently drawing down oil inventories, and once these stockpiles decline further, prices could spike sharply.
"At present, we're burning through oil inventories. Once inventories dwindle, oil prices will spike," Currie said at CERAWeek event by S&P Global.
Currie's warning comes as oil prices have surged amid escalating tensions between the United States and Iran, raising fears of a prolonged supply disruption. Brent crude has climbed above $110 per barrel, while US benchmark WTI is trading near $113, as markets react to the rising geopolitical risk.
Tensions escalated after Donald Trump issued a fresh deadline linked to the reopening of the strategically critical Strait of Hormuz, a vital route for global oil shipments. Trump warned of potential strikes on Iranian infrastructure if access through the strait is not restored. Iran, however, rejected the ultimatum and restrictions on maritime traffic remain in place, allowing only limited vessel movement.
Analysts say the situation has triggered a severe supply shock that is now evolving into a broader global energy crisis. Higher crude prices are already pushing up fuel costs and adding to inflationary pressures worldwide, while also raising concerns about slowing global economic growth.
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The OPEC+ alliance has warned that damage to energy infrastructure could have long-term implications for global supply, even after the conflict ends. Although the group has indicated higher output quotas, actual supply remains constrained due to bottlenecks in the Gulf region.
Market indicators are also pointing to extreme tightness in supply. Brent's prompt spread has moved into steep backwardation, surpassing levels seen during the Russia-Ukraine war, while Dated Brent, a benchmark for physical cargoes, has surged past $140 per barrel, its highest level since 2008. This indicates a scramble for immediate supplies in the physical market.
The Strait of Hormuz remains the most critical chokepoint in the crisis, as a significant portion of global oil supply passes through the narrow shipping lane. With Iran continuing to regulate transit and geopolitical tensions still high, uncertainty over supply is likely to keep oil markets volatile.
Currie's warning suggests that the real shock may come later, when falling inventories and restricted supply combine to push oil prices significantly higher, potentially triggering a wider global energy crisis.
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