As US oil inventories decline by 24mbbls, Hormuz contagion is seen to be spreading Sixty days into its closure and with the weekly US EIA oil inventory report highlighting an enormous 24.1mbbl inventory draw the broader impact of the closure of the Straits of Hormuz is now spilling into the US ''energy island''. With few signs that the dispute is set for imminent resolution, here we look at the net oil flows that we estimate have been lost, and the impact that this is having on the inventory picture. Combining this with our understanding of the outlook for non-OPEC supply growth to 2030 and the limited spare capacity that resided within OPEC prior to the closure we re-emphasise our view that despite the strong performance, the sector''s valuation remains undemanding, as discussed in detail in our recent sector review ''Fundamentally Changed''. We estimate an 11mb/d shortfall in supply and 500mbbl loss of inventory to date Assuming a 3mb/d reduction in demand as the impact of the Straits'' closure has taken its toll, amongst others, on Asia chemicals activity and Middle Eastern aviation, we estimate the oil market has suffered the loss of some 11mb/d of daily supply. Sixty days into the crisis and in our view this has translated to a loss of over 500mbbls, with global oil and product inventories rapidly heading towards the bottom of their five year range. Moreover, with the delivery of those last volumes that left the Gulf before the Straits closure now completed, the search for cargoes is bringing with it a sense of greater contagion, with aggressive inventory drawdown in the US the latest brick to fall. Of course it falls on resolution. Yet fundamentally the sector offers strong value. No doubt the announcement of a resolution to the Strait''s shut in presents a risk for oil equities. The need to rebuild inventories at a time of limited spare OPEC capacity and non-OPEC growth suggest to us, however, that elevated prices are here to stay, with the...