Aramco CEO Highlights Global Oil Supply Crisis Amid Inventory Shortages
Amin Nasser warns that nearly 3 billion barrels of oil supply have been lost since the onset of the Iran war, leading to dangerously low inventories.
Global oil inventories have dropped to less than 6 billion barrels.
Brent crude prices could have surged to $200 per barrel without Saudi Arabia's East-West pipeline.
Replenishing oil stocks may take up to two years despite ongoing demand.
In a stark warning delivered at the Energy Intelligence Forum in London, Saudi Aramco's CEO Amin Nasser stated that the global oil supply has suffered a significant decline, losing nearly 3 billion barrels since the beginning of the Iran war. This reduction is roughly equivalent to half of the crude oil and products that would typically transit through the Strait of Hormuz during this period. Nasser described the current state of global oil inventories as 'scarily thin,' even as crude flows from the Middle East show signs of recovery.
Nasser provided context by noting that the world entered the crisis with approximately 10 billion barrels of oil stocks. However, over 1 billion barrels have been drawn from these inventories to compensate for supply losses, primarily from onshore commercial stocks. As a result, commercial inventories now stand at less than 6 billion barrels, with most of this quantity not readily available for immediate use.
During his address, Nasser emphasized that the oil supply system is under considerable strain. He remarked, 'The system is already straining,' highlighting the limited options available to meet global demand. He also indicated that without the East-West pipeline, which allows Saudi Arabia to transport crude from its eastern oilfields to the Red Sea, Brent crude prices could have reached $200 per barrel. Currently, Aramco has restored pipeline flows to about 80% of capacity following a recent attack.
The implications of this supply crisis extend beyond immediate price concerns. Nasser mentioned that replenishing oil inventories while simultaneously meeting global demand could take as long as two years, even after the Strait of Hormuz fully reopens. This warning comes on the heels of the G7's decision to release up to 100 million barrels of emergency oil and diesel stocks over the next four months, with IEA members having already released around 325 million barrels of the pledged 400 million barrels since March.
Looking ahead, Aramco is exploring additional crude export routes and expanding overseas storage options to mitigate reliance on specific shipping corridors. Nasser noted that the company could activate its full sustainable production capacity of 12 million barrels per day within days, indicating a proactive approach to addressing the ongoing supply challenges.
