The Next Bull Market Could Be Built on Inventory Replenishment

Cyril Widdershoven

Sat, July 11, 2026 at 4:00 PM PDT 9 min read

The Middle East is once again at the center of global energy markets due to the renewed military confrontation involving Iran. Markets, however, should recognize that, unlike in previous crises, the world is entering this new phase with a significantly weaker strategic safety net. At present, crude oil prices still respond to headlines surrounding military operations, shipping incidents, and diplomatic statements. Still, it is now time that markets should no longer overlook the structural consequences of the past months. The world's emergency buffer has been substantially depleted. Crude oil prices and supply during the first phase of the Iran crisis have been largely absorbed by the release of strategic petroleum reserves, rerouting exports, and (unexpected) weaker demand in Asia. Right now, we are in a new and much more dangerous phase, in which everything will prove considerably more challenging, mainly because governments, oil companies, and refiners will increasingly have to rebuild depleted reserves while geopolitical uncertainty remains elevated.

This distinction between Phase I and II is critical. For decades, geopolitical shocks were generally assessed through the lens of lost production or disrupted exports. The main focus of analysts has been calculating how many barrels might disappear from the market, while also assessing whether Saudi Arabia, the United Arab Emirates, or other producers are holding enough spare production capacity to compensate. Even though this methodology remains relevant, it is no longer sufficient or fully applicable. In the coming weeks and months, the most important question will be how many additional barrels will need to be purchased to restore strategic resilience. We are witnessing a market shifting from being dominated by emergency releases to one increasingly driven by mandatory replenishment.

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The above is being substantiated or even reinforced by the recent military developments, as renewed U.S. military operations against Iranian targets, followed by Iranian retaliation against American and allied interests across the Gulf, demonstrate clearly how quickly regional tensions can threaten confidence in maritime trade. Even though Hormuz is not yet closed for a long period, shipping companies, charterers and insurers have to reassess operational risks again. Freight rates, war-risk premiums and voyage planning have become increasingly sensitive to military developments. The latter is the case even when crude exports continue to flow. The primary lesson at present is clear: physical supply need not disappear entirely for markets to become structurally tighter. The cost of every barrel transported, however, will increase solely due to persistent uncertainty.