Aramco CEO Warns of Dangerously Thin Global Oil Inventories
Saudi Aramco CEO Amin Nasser has raised serious concerns about the global oil supply situation, warning that inventories have reached critically low levels due to geopolitical tensions and disruptions. Speaking at the Energy Intelligence Forum in London, Nasser revealed that nearly 3 billion barrels of oil supply have been lost since the Iran war began. This loss is significant, roughly equivalent to half of the crude oil and products typically transported through the Strait of Hormuz in the same period.
Nasser explained that global oil stocks, which were around 10 billion barrels at the start of the crisis, have been depleted by over 1 billion barrels to compensate for supply shortages. Most of these barrels came from onshore commercial stocks, which have now dropped below 6 billion barrels. He emphasized that much of the remaining inventory is not easily accessible, leaving the global supply buffer dangerously thin. 'The system is already straining,' Nasser stated, highlighting the limited options available to meet current demand and the heightened risk of future supply shocks.
To mitigate some of the pressure, Saudi Arabia's East-West pipeline has played a crucial role by transporting crude oil from the eastern fields to the Red Sea, bypassing the Strait of Hormuz. Nasser noted that this pipeline has helped prevent a potential spike in Brent crude prices to $200 per barrel. The pipeline’s flow capacity has been restored to about 80% following recent attacks. However, he cautioned that replenishing global oil inventories to comfortable levels could take up to two years, even if the Strait of Hormuz reopens fully.
In response to ongoing risks, Aramco is exploring additional export routes and expanding overseas storage facilities to reduce dependency on single shipping corridors. Nasser also confirmed that Aramco could quickly increase its sustainable production capacity to 12 million barrels per day if necessary. The warnings come as the global energy landscape faces ongoing challenges from geopolitical conflicts and fluctuating demand, underscoring the need for strategic energy planning and diversification.