Vitol CEO: Refined Product Inventories Hit Rock Bottom, Tight Supply Leaves Almost No Buffer
nashnova research
Vitol CEO Russell Hardy warned that global refined-product stocks have fallen to floor levels and are still drawing down. The Middle East and Russia have together lost roughly 4 million barrels per day of product exports, leaving the refining system with almost no cushion.
How tight are refined-product inventories?
Hardy said global refined-product stocks have essentially hit bottom — and are still declining. Refining capacity is not enough to stop the drawdown.
This means → the world's remaining buffer inventory is being steadily consumed. Any new supply disruption would find a market with almost no elastic room to absorb the shock.
Crude, by contrast, looks relatively stable. In plain terms = there is still some slack in raw oil, but once it is processed into gasoline and diesel, the cupboard is bare.
Why are refined products rallying harder than crude?
Crude futures are up roughly 60% year-to-date in 2026, but refined-product gains have been even sharper.
Two drivers sit at the core: ① Ukraine launched multiple drone strikes on Russian refineries, destroying refining capacity directly; ② Russia imposed a diesel export ban, tightening supply further.
Hardy pointed out that the Middle East and Russia have each lost about 2 million bpd of product exports — the central force behind the fuel-market crisis.
Phillips 66 SVP Mark Senn confirmed at the same conference: the U.S. refining system is running at full capacity. U.S. distillate stocks — including diesel — have dropped to their lowest level for this time of year in at least 25 years, and retail diesel prices have hit an all-time high.
Can oil still flow smoothly through the Strait of Hormuz?
Hardy estimated current daily oil transit through the Strait of Hormuz at roughly 10 million barrels (about 9 million crude, the rest refined products), but acknowledged "the actual figure is hard to pin down."
Macquarie Group's earlier estimate was lower — about 7 million bpd — versus a pre-war level of roughly 20 million bpd.
This means → strait throughput has shrunk dramatically, and it is not guaranteed every day. It depends on vessel availability, insurance, and crew willingness. Put simply = whether the oil gets out is an open question, day by day.
Can a Chinese demand recovery ease the strain?
Hardy expects Chinese crude demand to see some recovery as the winter heating season approaches at year-end.
But China built up large strategic and commercial stockpiles before the U.S.–Iran war broke out, pushing this year's imports 5–6 million bpd below last year's level. Hardy called that gap "unsustainable."
August data showed Chinese crude imports edged up from July, yet total volumes remained nearly a quarter below the year-ago figure.
This reflects a country still digesting earlier stockpile builds — unlikely to play "firefighter" for the global product market in the near term. Whether refined-product inventories can stop drawing down before peak-demand season is the pivotal marker for any relief in fuel-price pressure.
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