Speaking at the Bernstein Strategic Decisions Conference in New York on Thursday, May 28, Neil Chapman, Senior Vice President at ExxonMobil, warned that the market was approaching unusually low inventory levels and said prices could rise rapidly once operational minimums are breached.
“We’re approaching unheard of inventory levels,” Chapman said. “I mean really, really low levels. You can debate whether that’s going to hit those really low levels in two weeks or three weeks. Once you get to that point, you’ll see price shoot up.”
Chapman’s forecast for where prices go once that floor is breached was stark: physical Brent crude cargoes, he said, will spike to between $150 and $160 a barrel, more than 60% above where July Brent futures closed on Thursday at under $94 a barrel.
Futures markets have continued to hold on to hopes of a US-Iran agreement that could reopen the Strait of Hormuz. Chapman, however, suggested the physical market was signalling something very different.
“What I’m really saying is, once you get to the minimum inventory levels and all-time low inventory levels, there’s only one way to go,” he said. “That’s the situation.”
According to the International Energy Agency, Iran’s closure of the Strait of Hormuz has removed more than a billion barrels from the market, making it the largest supply disruption in recorded history.
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Strategic reserves across the Western world have been deployed to plug the gap; the IEA’s member states agreed in March to release a record 400 million barrels. But as the Hedgeye chart of weekly US Strategic Petroleum Reserve stocks makes viscerally clear, that cushion is collapsing.
SPR holdings have fallen from above 415,000 thousand barrels in early 2026 to below 375,000 — a near-vertical drop with no precedent in the dataset.
Analysts at HFI Research, in a note titled ‘We Are Going Full Speed Into The Wall,’ said the market remains under severe pressure. With US refinery throughput running at roughly 17 million barrels per day, preliminary estimates suggest another 13-14 million barrel draw could occur in the coming week alone.
Cushing, Oklahoma, the delivery point for US crude futures, is forecast to reach tank-bottom levels by the end of June. Distillate stocks are just six million barrels above operational minimums, while gasoline inventories are roughly 10 million barrels away from the same threshold.
Chapman acknowledged that demand destruction will eventually restore balance. “When the price gets to a certain level, demand destruction brings it back,” he said. But that mechanism only activates after the shock, not before it.
The futures market, still trading on ceasefire hopes, has spent the past two months ignoring what the physical oil market is signalling. Industry executives now say that window is closing fast.
