Vortexa warns of crude inventory decline in next 2-3 months

By Lori Ann LaRocco – New energy data shows the crude cushion that has been built up will be shrinking in the next 2-3 months unless geopolitics improve.

In a webinar, Vortexa explained, with Atlantic Basin inflows already slowing and China drawing inventories at up to ~1 mb/d, they see a high risk of significant tightening within the next 2–3 months and estimate that China's extra crude buffer built since 2025 could be largely worked down within about four months if current draw rates persist.

"Everything looks very well supplied, but there is simply no warranty that it will happen in exactly the same way down the line," said David Welch, chief economist for Vortexa. "I do see increasing risk that the market could tighten significantly. That will not happen from today to tomorrow, but two or three months down the line, I think this is very well possible unless we see a significant turnaround in the geopolitical events."

The new normal for oil trade in 2026 is adapting, but Vortexa experts say it's coming at a cost.

"The key distinction is that the strait is not simply open or closed, explained Claire Jungman, director of maritime risk and intelligence at Vortexa. "It is operating selectively, and vessels that are crossing are increasingly doing so with limited visibility. We're seeing reduced visibility through Hormuz, greater reliance on ship-to-ship transfers and pipelines, longer alternative routes, and more crude accumulating near the end buyer. But each workaround introduces additional cost, delay, and operational risk."

Vortexa analysts said ship-to-ship transfers dominated the July oil trade, with 57% of Gulf crude exports involved in a ship-to-ship transfer, compared with just 12% a year earlier. STS is no longer just a concealment tool; it's a logistics backbone.

"While absolute STS volumes reached an unprecedented level, the number of shuttle vessels may look relatively small, but their impact is significant. A single VLCC can carry roughly 2 million barrels, so even a handful of crossings can materially support regional exports. Recent reports also suggest that a major UAE producer has added five VLCCs and chartered around 25 crude carriers, with some being used for shuttle movements and others for direct deliveries," said Jungman.

This activity remains very visible in the current Vortexa data. Just yesterday, analysts observed five dark crude ship-to-ship transfers taking place in the Pujara transfer zone.

"The UAE origin volumes are particularly important," said Jungman. "STS activity in the region has traditionally been associated with sanctioned Iranian trade or efforts to disguise cargo origin. Its growing use for the mainstream UAE barrels, as well as Kuwaiti and Iraqi, shows that it's becoming a much broader logistical tool."

Vortexa analysts said ferrying the cargo to another vessel for the longer voyage may reduce the final carrier's exposure, but it adds cost, time, counterparties, and documentation risk.

"The continued exports should not be interpreted as a return to normality. The barrels are moving, but normal shipping practices are not," said Jungman.

While Gulf exporters are adapting through dark transits and ship-to-ship transfers, Jungman said Saudi and other Red Sea origin barrels have another potential workaround of moving north rather than south.

Red Sea crude has responded to the Houthi announcement on July 20th that Saudi shipping would be targeted at Bab al-Mandab.