PHOTO: AFP/FILE

REUTERS, Houston/New York

Global oil inventories are running dangerously low as a deal to re-open tanker traffic through the Strait of Hormuz has proven elusive, and industry executives and analysts warn there could be another oil price shock in the ​coming weeks, severe enough to upset broader financial markets.

Some fear the next move higher for oil prices would pose a risk to economic growth, bond yields and the bull market ‌for stocks. “We’re approaching unheard of inventory levels. 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. But once you get to that point, you’ll see prices shoot up,” Neil Chapman, Exxon Mobil senior vice president, said at the Bernstein conference in New York on May 28.

Chapman said that if inventory levels get much lower, dated Brent, which is used to price more than 60 percent of globally traded crude, could rise to $150 ​or $160 a barrel.

Crude inventories and strategic reserve releases have kept oil prices somewhat under control in the four months that the war with Iran has kept supplies from reaching much of the world. ​Crude futures have been trading below $100 a barrel despite the strait remaining effectively closed.

For days, US President Donald Trump has said a deal to reopen the strait is imminent. But so far it has been elusive, and warnings from the oil industry have gotten sharper.

If stock draws continue at their current pace, sinking global oil inventories could hit critically low levels just as summer fuel demand hits ​its peak, the head of the International Energy Agency’s oil industry and markets division, Toril Bosoni, said on Tuesday.

“Once they (cushions) thin out, prices have to do more of the adjustment work. That means either consumers pay more or ​demand gets destroyed,” said Mehmet Beceren, vice president and senior market strategist at Rosenberg Research, who said a tipping point could be reached by the end of June.

If stock draws continue at their current pace, sinking global oil inventories could hit critically low levels just as summer fuel demand hits ​its peak, the head of the International Energy Agency’s oil industry and markets division, Toril Bosoni, said on Tuesday.

“Once they (cushions) thin out, prices have to do more of the adjustment work. That means either consumers pay more or ​demand gets destroyed,” said Mehmet Beceren, vice president and senior market strategist at Rosenberg Research, who said a tipping point could be reached by the end of June.

US crude stocks are down almost 64 million barrels since the start of the war, and have fallen ​for eight straight weeks.

The US is in the process of releasing 172 million barrels from the SPR, part of a coordinated effort by the IEA to release a record 400 million barrels of oil to combat rising prices.

Those stock releases alongside a ‌drop in Chinese seaborne crude imports, which in May hit the lowest level in nearly 10 years, have helped quell some of the supply shock.

“I think the risk of a second price shock is real, but the key point is that it may come from the exhaustion of buffers rather than from the initial Hormuz closure itself,” Shohruh Zukhritdinov, a Dubai-based oil trader, said.

Drawdowns in US strategic petroleum reserves, fuel substitution and other factors that have limited the price spike may not be enough if the disruption drags on, analysts in JPMorgan’s Data Assets and Alpha group said.

The White House did not respond to a request for comment.