Goldman Sachs warns inventory rebuilding won’t avert 2027 oil supply glut

GOLDMAN Sachs has warned that efforts by countries to replenish depleted global oil inventories will not be sufficient to prevent a significant supply glut expected in 2027, as shipping through the Strait of Hormuz continues to return to normal, Oilprice.com reported.

The bank said oil stockpiles, including crude and refined petroleum products, have fallen to multi-decade lows in several parts of the world after governments released strategic reserves in March to cushion the impact of the Middle East crisis, which disrupted millions of barrels of daily crude and fuel flows through the Persian Gulf.

With inventories now at depressed levels, countries are expected to begin rebuilding their reserves, a move that could provide temporary support for oil prices.

In the United States, the Strategic Petroleum Reserve (SPR) has declined to its lowest level since 1983, while crude inventories at Cushing, Oklahoma, the delivery hub for West Texas Intermediate (WTI), have dropped to levels considered operationally stressed.

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Several countries, particularly across the Asia-Pacific region, are also planning to expand their strategic oil storage capacity to strengthen energy security and reduce vulnerability to future supply disruptions similar to those caused by the temporary closure of the Strait of Hormuz, a critical route for global oil and LNG shipments.

Despite these supportive demand factors, Goldman Sachs believes they will not be enough to absorb the excess supply expected next year.

Speaking to Bloomberg Television on Wednesday, Co-head of Global Commodities Research at Goldman Sachs, Samantha Dart,said the bank forecasts a global oil surplus of about 3 million barrels per day (bpd) in 2027.

According to Dart, global rebuilding of strategic petroleum reserves could increase demand by slightly more than 1 million bpd, but that would still leave the market with an estimated surplus of nearly 2 million bpd.

Goldman Sachs is not alone in its outlook. Other major Wall Street banks have also begun forecasting a sizeable oil surplus following the mid-June memorandum of understanding signed by the United States and Iran to negotiate a peace agreement.

Morgan Stanley has already lowered its oil price forecasts for the next 18 months, citing expectations that the reopening of the Strait of Hormuz will speed up the emergence of a new global supply glut.