Logan: increase in exports of oil has mostly come from inventories, not new production

Recent developments in global oil markets indicate that the surge in oil exports has primarily stemmed from the drawdown of existing inventories rather than an increase in new production. This trend has been particularly evident in the wake of the Strait of Hormuz conflict, which disrupted oil flows and prompted market participants to rely on stored crude to meet demand. According to the EIA, global oil inventories fell by an average of 5.1 million barrels per day in the second quarter of 2026, with further declines expected in the third quarter as stranded tankers resume operations.

The International Energy Agency (IEA) also highlights that global oil inventories have drawn down by more than 250 million barrels since March 2026, with increase in tanker traffic consisting of oil that had been previously stored. This suggests that the current rise in oil exports is largely a result of inventory adjustments rather than a fundamental shift in production levels. In particular, countries such as Saudi Arabia and the United Arab Emirates have redirected some of their exports to terminals outside the Strait of Hormuz, helping to maintain supply flows without necessarily increasing output.

While non-OPEC+ producers, particularly in the Americas, have increased exports in response to the crisis, these gains have not been driven by new production but rather by utilization of existing capacity and the release of strategic reserves. The EIA forecasts that global oil production remains below pre-conflict levels through the end of 2026, with most production expected to return to normal in early 2027. As a result, the current surge in oil exports is largely a temporary adjustment to maintain market stability rather than a sign of sustained production growth.