The oil inventories protecting the global economy from supply shocks have shrunk to a "frighteningly thin" level, Amin Nasser, CEO of Saudi oil giant Aramco, said Monday at the Energy Intelligence Forum in London.
"Until Hormuz is fully open and security returns, the reality is that pressure on both ends of the barrel will intensify," Nasser said. "And even then, refilling inventories while meeting demand could take up to two years."
3 billion barrels vanished from the market
According to Nasser, nearly 3 billion barrels of oil have disappeared from the market since the war began — roughly half the crude oil and refined fuels that normally pass through the Strait of Hormuz in such a period. About 1 billion of those barrels came from inventories, mostly commercial stocks. He said the roughly 6 billion barrels still stored worldwide "are not actually available." He added that prices for refined fuels have risen faster than crude oil prices.
The remarks came days after the world's largest economies announced they would release up to 100 million barrels of oil and diesel from emergency reserves to curb rising fuel prices. Nasser said the move would buy time but would not close the gap between supply and demand.
Exports recovering, prices not falling
The Strait of Hormuz has been at least partially blocked since the United States and Israel struck Iran in late February. Saudi Arabia, the United Arab Emirates and Kuwait are moving oil through the strait in their own tankers, and Gulf oil exports have nearly returned to pre-war levels. Yet Brent crude has remained around $100 a barrel over the past month, as markets continue to price in the security risk in the Persian Gulf and the Red Sea.
Aramco has increased shipments from the Ras Tanura terminal. The East-West Pipeline, which was briefly shut following an attack last month, is operating again at about 80% of its capacity, allowing more oil to be shipped via the Red Sea. Nasser said the company maintained stable supply by drawing on overseas storage and rapidly repairing damaged infrastructure. It is now examining additional export routes and overseas storage facilities to avoid dependence on a single path to customers.
