Rory Johnston

It's it's, you know, flowing, but it hasn't been consumed and has been produced.

So it's a stock.

All of this kind of stacked together, you have roughly eight billion barrels of stocks in the global system that we generally know about.

But of that, only about three billion or so are actual commercial stocks in advanced OECD nations that we track.

And even then, that includes things like pipelines and everything else.

So it's really the functional, usable, the workable inventory.

It's probably more like one, one and a half billion barrels.

And point number three, and I should also say of that stock aspect, you know, strategic inventory, strategic reserves are also part of this.

That when you have

Now, the IEA through this crisis announced its largest coordinated strategic stock draw in history of 400 million barrels out of the 32 IEA member states.

In the way I view the oil market, I view SPRs or strategic petroleum reserves as stocks, but not as proper inventory because the decision to build an SPR or draw down an SPR is a discretionary policy choice by politicians, by policymakers, right?

rather than by, you know, the market per se.

Whereas commercial stocks, I treat essentially as the cumulative residual of this market.

If it's oversupplied, they need to catch that and that needs to rise.

If it's undersupplied, they need to catch that and it needs to fall.

And the final piece of this is after everything is said and done, and again, we can't draw down inventories to zero.

If oil and water went to zero, there would be no global oil market left.

That's just as simple as that.

So the final step is if you can't fill in supply, you draw down too many inventories, prices need to rise to destroy demand on the other side.

And that is, I think, you know, just for even general scenario here, again, we're assuming Hormuz remains closed indefinitely.