Oil and gas stockpiles must last until March, the month the IMF assumes Hormuz reopens

The Iran war is being paid for out of oil and gas stockpiles, and no deal is expected before the November 3 midterms. Europe's gas storage and the IMF's 2027 forecast both run out of room in March. A later deal would come when the tanks are close to empty, and refilling them becomes a 2027 bill.

The thread

Storage. Governments have paid for the war since February 28 by emptying their tanks. The US emergency oil reserve is at its lowest level since 1982. The Energy Department expects it to fall further, into a range a Texas A&M professor calls risky for the salt caverns that hold it. Europe's gas storage is the emptiest for early October since records began in 2011, because Qatari LNG cannot get out through Hormuz and Asian buyers outbid Europe for one-off cargoes.

November 3. Nobody in these stories expects a deal before the US midterms. Trump has said he will not attack Iran before the vote, and Paul Tudor Jones, who is betting on higher oil, argues that any fix would have happened already. Tehran called the US reply to its Hormuz conditions insufficient, and the two sides still disagree on whether nuclear talks or shipping come first. BMI expects Brent to stay above $100 until a deal around the end of March 2027.

March. All three stories hit their deadline in that month. ENTSOG, the group of European pipeline operators, expects EU gas storage to fall to 29% by the end of March in its base case. ABN Amro says a cold winter would push it close to the minimum operators treat as safe. The IMF's forecast of 3.4% world growth in 2027 assumes Hormuz reopens by March, and in its downside case a deeper war cuts half a point from that number.

The refill. Even a deal on schedule leaves a second bill. OPEC raised its 2027 demand forecast because governments and companies must buy back the barrels they burned, and that buying counts as demand. Washington has to replace much of what it released from the reserve, and Congress has funded only a sliver of the cost. Europe must rebuild its gas stocks next summer, and BNP Paribas sees no return to prewar gas prices before 2028.

The wallets. Buffett Wallet holds Occidental and Chevron, which sell crude at the world price. Occidental's realized oil price rose by about a third in the third quarter, and its shares have climbed since late September, so investors have already priced in much of the war premium. Any deal would remove that premium first, while restocking keeps buyers in the market afterward. AI Natural Resources holds Cheniere at about a tenth of its portfolio, and Cheniere's shares barely moved while Asia and Europe bid against each other for LNG.