Global Oil Reserves Are Shrinking Fast

Summary

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WSJ What’s News (May 18, 2026)

Episode Summary: "Global Oil Reserves Are Shrinking Fast"

Main Theme

This episode of WSJ What’s News centers on the global energy crisis driven by dwindling oil reserves, a result of ongoing conflict in Iran and the consequential closure of the Strait of Hormuz. The show examines the economic, environmental, and geopolitical ripple effects—including shifts toward coal, surging fuel prices, and the broader market instability—while touching on other major news stories shaping the week.

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Key Discussion Points & Insights

1. The Long Island Railroad Strike

Impact on Commuters

• The LIRR strike enters its third day with “a day of chaos” for the 300,000 daily passengers commuting between New York City and Long Island. (00:32–02:01)
• Limited shuttle service from the MTA isn’t enough to stem crowding; recommendation is to work from home if possible.
• Notable quote:
  "The bottom line is no one wins in a strike. Everyone is hurt." — Unidentified Expert (01:35)

2. US–China Economic Relations

Trade Boards and ‘Strategic Stability’

• The US and China agreed to launch bilateral boards of trade and investment—a positive sign toward easing economic tensions. (04:14–05:59)
• US to resume sales of aircraft and components to China, a boost for US aviation.
• Strategic stability is the guiding principle, with both sides opting not to “play their big trump cards” such as rare earth export bans (China) or new tariffs (US).
• Notable quote:
  "Strategic stability...amounts to something of a ceasefire or a truce between the two sides." — Jonathan Chang, WSJ Beijing bureau chief (04:51)

China’s Economic Slowdown

• China faces slowing domestic growth; real estate investment and retail sales drag despite prowess in future technologies. (06:06)
• Beijing has strong incentive to stabilize relations with the US given weak internal demand.

3. Global Health Emergency: Ebola in Africa

• WHO has declared an Ebola emergency in the DRC and Uganda, noting a new, highly contagious variant. Over 80 deaths and 200 suspected cases reported. (07:20)
• Urgent calls for case isolation and contact tracing.
• No cure available; risk of further undetected spread.

4. Energy Crisis & Oil Reserves Depletion

Background: Strait of Hormuz Closure

• The war in Iran effectively shutters the Strait, the artery for a huge portion of global oil and liquefied natural gas (LNG) shipments. (08:44)

Coal’s Comeback

• Asian LNG importers (Taiwan, South Korea) and even Italy are reverting to coal to bridge the energy gap, despite the environmental cost—coal emits around twice as much CO₂ as natural gas.

Oil Stockpile Drawdown

Global Inventories Falling “at a Record Fast Pace”

• “At the start of the conflict, there was a lot of oil around... but those stockpiles are finite.” — Georgi Kanchev, WSJ (09:37–11:03)

• International Energy Agency projects wealthy nations will draw down 210 million barrels from storage by end of July.

• Tanks cannot be fully emptied for technical reasons (pipeline pressure, operational minimums). Some forecasters (JPMorgan) see stress levels reached as soon as June, with true minimums in September.

Price Surge and Market Outlook

• If disruption continues, Brent crude could surpass $148/barrel (the 2008 record). Some projections see $130–$140 by next month. (11:03–11:14)
• “If the Strait of Hormuz doesn’t reopen... prices will react.” — Georgi Kanchev (11:14)

Global Distribution of Pain

• US is “in a better position” due to domestic production but feels the hit at the pump.
• Asian nations like India, Thailand, and Taiwan are among those hardest hit by shortages of both crude and related products (fuels, plastics, etc.). (11:47)
• Notable quote:
  “It’s not a unified picture... For some places it’s much more acute.” — Georgi Kanchev (11:47)

Risks Ahead: Prolonged Recovery and Economic Headwinds

• Even a sudden reopening of the Strait won’t quickly restore normalcy; replenishing stockpiles could take months or more. (12:51)
• Ongoing high prices may trigger “demand destruction”—governments could urge less driving/flying, potentially tipping the world toward recession.
• Notable quote:
  “The world will be flirting closer and closer with recession.” — Georgi Kanchev (12:51)

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Notable Quotes & Memorable Moments

• On child protection in the digital age:
  “They are putting people behind their profits and in this case, these people are our most vulnerable and our greatest asset. That’s our children.” — Senator Katie Britt (04:01)

• On global oil crunch:
  “At this point, there’s still a lot of oil in the tanks, but it’s emptying at a record fast pace.” — Georgi Kanchev (09:37)
  “If oil prices continue to increase, that will lead to more demand being curtailed... the world will be flirting closer and closer with recession.” — Georgi Kanchev (12:51)

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Timestamps for Key Segments

• LIRR Strike & Commuter Impact: 00:32–02:27
• US–China Trade Truce & Economic Context: 04:14–07:20
• WHO Ebola Emergency in Africa: 07:20–08:14
• Energy Crisis, Shift to Coal, and Oil Inventory Analysis: 08:44–13:40

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Episode Tone

The episode blends WSJ’s signature brisk, information-packed delivery with urgent concern—especially in the latter segments—over the mounting risks posed by energy shock, with clear and straightforward explanations from experts.

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This comprehensive overview ensures listeners (or non-listeners) understand the stakes behind the day’s headline news, with all critical facets of the fast-shifting global oil landscape and its economic consequences clearly unpacked.

Transcript

[Steve Booth]

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[Daniel Bach]

Commuters in New York face a day of chaos as the strike shutting the Long Island Railroad goes into a third day. Plus, the US And China agree to launch boards of trade and investment. And while fuel is expensive now, brace yourself because global oil inventories are falling at a record pace.

[Georgi Kanchev]

The highest that oil prices have ever reached, at least for the brent benchmark, was $148 a barrel. This was in 2000. Some expectations out there that if the Strait of Hormones remains closed for another few months, this level would be tested.

[Daniel Bach]

It's Monday, May 18th. I'm Daniel Bach for the Wall Street Journal, filling in for Luke Vargas. And here is the AM Edition of what's news, the top headlines and business stories moving your world Today, a marathon day of negotiations has failed to end the strike on the Long Island Railroad, setting the stage for a rough start to the week for commuters, unions and the Metropolitan Transportation Authority, which runs the railroad, negotiated into the early hours of this morning after some prodding from the National Mediation Board and New York Governor Kathy Hochul.

[Unidentified Expert/Commentator]

The bottom line is no one wins in a strike. Everyone is hurt. The hundreds of thousands of people who rely on the railroad and the thousands of unionized workers who are losing out on wages.

[Daniel Bach]

The talks went well enough that both sides agreed this morning to continue. But as the Journal's Alyssa Luckpat explains, that won't save Monday morning's commute because of the time needed to get crews and trains in Place.

[Alyssa Luckpat]

About 300,000 passengers use the railroad every day, and it connects New York City and Long Island. The MTA has arranged some limited shuttle service, but they said it's going to be crowded. The MTA said riders should work from home and avoid non essential travel. If a commuter has to get to the city, they'll either have to drive in what's probably going to be heavy traffic, or they'll have to work from home until the strike ends. So long story short, it's going to be a mess.

[Daniel Bach]

The Transportation Security Administration is launching a pilot screening program for Delta and JetBlue passengers catching morning flights out of Boston Logan. Starting next month, passengers will have the option to go through security at a remote terminal In Framingham, roughly 25 miles from the airport. Passengers can then jump on a shuttle bus which will drop them off beyond airport security, allowing them to skip, check in lines, chaotic curbside drop offs and and crowded parking lots. TSA said the program is part of a federally funded effort to modernize screening. Similar pilots have been authorized for eight other locations, including Los Angeles and Atlanta. Two senators on Capitol Hill are looking to ban digital gambling ads targeting minors. A bipartisan bill comes after a recent study found that over a third of male adolescents gambled in the past year. States have introduced rules around the ads in a bid to tackle social media addiction, but but critics say they're ineffective alongside the boom in sports betting and prediction markets. The federal bill could hit violators with fines of up to $100,000 per ad, but it would exclude broad audience sports broadcasts and direct online searches by minors.

[Senator Katie Britt]

I think we have a lot of parents out there, though, that don't actually know the harms of social media.

[Daniel Bach]

That's Republican Senator Katie Britt of Alabama, who is introducing the bill alongside Connecticut Democrat Richard Blumenthal with the aim of holding platforms and AI companies accountable for the content they present to children as part of a wider push to address youth safety online. Britt says that social media companies are putting children at risk by prioritizing profits.

[Senator Katie Britt]

They are putting people behind their profits and in this case, these people are our most vulnerable and our greatest asset. That's our children.

[Daniel Bach]

China says it has agreed to establish bilateral boards of trade and investment with the US in a move towards shoring up a commercial truce between the world's two largest economies. China's Ministry of Commerce also said the US Agreed to sell aircraft as well as aircraft engines and components to China, a boost for one notable industry where the country lags behind the U.S. jonathan Chang is the Journal's Beijing bureau chief. John, you report the details of how these boards would meet and operate still need to be negotiated, but U.S. trade Representative Jameson Greer said over the weekend that the US now has strategic stability with China. With what does that mean?

[Jonathan Chang]

Yeah, strategic stability has become a bit of the buzzword coming out of this summit, and that really refers to the sense that both China and the US had each other over a barrel. China could at any moment restrict exports or access of the US to these rare earth metals, these rare earth minerals that are useful in all sorts of different industries, including manufacturing, including military applications, as well as on the flip side, you have the US and its ability to impose tariffs. And that can also do a lot of damage to a country like China that is so reliant on exports as their main engine of growth. So I think strategic stability here effectively amounts to something of a ceasefire or a truce between the two sides that neither the US nor China would play their big trump cards here, as it were, and ruin the other side's economy. So to keep this strategic stability going for another few months, if not longer, I think was part of the objective here. You could say it was the central objective. And in that respect, as far as we are aware, is live and is continuing.

[Daniel Bach]

And what about the timing for China? I note data out this morning showing the economy is slowing once you exclude exports.

[Jonathan Chang]

China's economy has not been in good shape, despite the fact that China is at the technological frontier on so many future technologies. The real estate sector, which was one of the largest engines of growth, has been basically in a deep freeze for the last few years. Investment has plunged, and there's a question about how long the export machine will continue to hum. And then you have retail sales. That, of course, is a measure of how domestic spending is going. And it is not going well at all. It was barely positive for the month of April, which is a big decline from where it has been in recent months. And a real sense of here that Chinese consumers just don't feel confident spending money. And that's not good for its economy and it's not good for the world's economy either. So right now, the Chinese economy, I'm not sure that it's able to take on another big potential blow in the form of strained US China relations, perhaps another trade war or just more political geopolitical pressure from Washington. And I think the leadership in Beijing in that respect, was eager to strike a deal and was eager to come to some sort of a detente or to keep the current detente with the US Alive.

[Daniel Bach]

The World Health Organization has declared a global health emergency over an Ebola outbreak in the Democratic Republic of Congo and Uganda and is urging both countries to isolate confirmed cases and anyone those people have been in contact with. The United Nations Health agency said around 80 deaths and over 200 possible cases have been recorded so far and warned that the epidemic could still be spreading undetected. The recent cases involve a rare and highly contagious strain of the virus, different from the strain responsible for several past outbreaks. Ebola is a viral fever transmitted through bodily fluids, and there is currently no cure. Coming up with the war in Iran choking off supplies of oil and liquefied natural gas, more countries are turning to coal. That story after the break. Foreign.

[Goldman Sachs Podcast Host]

What's driving the markets this week? What's on investors minds as they look ahead? Find out on the Markets podcast from Goldman Sachs. A breakdown of market moves and macro signals in 10 minutes or less. The Markets podcast from Goldman Sachs. Listen now.

[Daniel Bach]

With the war in Iran effectively shutting the Strait of Hormuz and cutting off liquefied natural gas supplies, coal is making a comeback. Taiwan and South Korea, among Asian countries that are more reliant on LNG imports, are both turning to coal, which emits around double the amount of carbon dioxide as burning natural gas. Even Italy has put its coal plants on standby as the country prepares for a prolonged energy shock. And while some countries are scrambling to shore up energy, fuel may also be in short supply soon. Journal correspondent Georgi Kanchev writes that the strait's closure is drawing down global oil inventories to the point that the world's safety net for fuel is rapidly dwindling. He spoke to our Luke Vargas.

[Luke Vargas]

Georgi, walk us through the last two and a half months if you could. Basically from where oil inventories were at the start of the war, pretty flush from what it sounds like to where they are now.

[Georgi Kanchev]

Absolutely. When we started, when the conflict began, there was a lot of oil around in tanks and also on ships in the sea. And that meant that the market had a bit of a cushion. But of course, like with any stockpiles, they're finite. And especially at a time when you cannot fill those tanks back up, you're drawing from those tanks. At some point they start emptying. At this point, there's still a lot of oil in the tanks, but it's emptying at a record fast pace. And that's a problem because the International Energy Agency expects that wealthy nations will draw another 210 million barrels by end of July. So we're talking about huge amounts of oil being taken out of storage. And at some point there's various expectations when that point is, we would be reaching kind of operational minimums because those tanks, they cannot be fully emptied for operational reasons. There needs to be some oil for those pipelines for pressure. So for technical reasons, they can be fully emptied. And for example, JP Morgan expects that those stress levels, the absolute minimum levels, would be reached by September and and by June already. So next month there would be a point where prices would start reacting to that new reality. The highest that oil prices have ever reached, at least for the Brent benchmark, was $148 a barrel. This was in 2008. There are some expectations out there that if the Strait of Hormones remains closed for another few months, this level would be tested.

[Luke Vargas]

Yeah. Georg, you even had an expert in your piece from Capital Economics saying we could get to $130, $140 barrel oil by next month. So this could actually be up faster than that.

[Georgi Kanchev]

Absolutely, yeah. And that's the thing, because right now a lot of the expectations on the market that the Strait of Hormuz will open in the coming weeks, and right now there's still oil in the storage. So for the next few weeks, the market is okay. But if the Strait of Hormuz doesn't reopen, then the storage drawdowns continue and then prices will react.

[Luke Vargas]

Georgi, I mean, in terms of the effects of this, as we near these stress levels for reserves, you know, is the pain likely to be felt in equally around the world? I would maybe imagine the US Is in a slightly better position, but maybe not.

[Georgi Kanchev]

Yeah, absolutely. So the US Is in a better position given the fact that it's, it's a big oil producer. Although kind of the global price of oil is being reflected at the pump in the US There are places around the world that are faring much worse. In Asia, there's countries like India, Thailand, Taiwan that are approaching these levels of scarcity pretty quickly, especially when it comes to not just crude oil, but also products that are being used in transportation, in making plastics, in, you know, daily life, in cooking, even. So you're absolutely right. It's not a unified picture. Globally, inventories are falling fast, but for some places it's much more acute.

[Luke Vargas]

And finally, Georgi, I don't want to be an alarmist here, but what kind of responses might we expect to see if we continue to approach these levels of stockpile depletion? You've mentioned higher prices. There's also, of course, demand destruction where countries step in, try to encourage people not to drive, not to fly, all sorts of ways to cut back on fuel consumption. But I'm thinking about, even if the war ends now, you've got these stockpiles really low and the world just that much more vulnerable until they can replenish these stockpiles, which can't be a fast process.

[Georgi Kanchev]

Absolutely, that's exactly the case. Analysts is saying that even if the Strait of Hormuz were to open tomorrow, coming back to pre war levels is going to take months, if not even until next year. So that is one factor. And then you have to obviously replenish those stockpiles that have been drawn by now. And if oil prices continue to increase, that will lead to more demand being curtailed, which which, of course, is problematic for the economy because that means that the world will be flirting closer and closer with recession. And that's the demand side of the equation, is something that is quite often underlooked. But as we don't have enough supply, it is really the demand side that has to compensate. Countries will have to pay a higher price for that oil just so they have a bit more of a safety net in the future.

[Luke Vargas]

Georgi Khonchev is a foreign correspondent for the Wall Street Journal. Appreciate you as always, Georgi. Thanks so much for bringing us this story.

[Georgi Kanchev]

Thank you.

[Daniel Bach]

And that's it for what's news for this Monday morning. Today's show was produced by Hattie Moyer. Our supervising producer is Sandra Kilhoff. And I'm Daniel Bach for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.

[Goldman Sachs Podcast Host]

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