Aramco CEO Warns Oil Stock Recovery Could Take Two Years

Saudi Aramco CEO Amin Nasser warned that global oil inventories depleted due to the US-Israeli conflict with Iran could take up to two years to replenish. Speaking at the Energy Intelligence Forum in London, Nasser highlighted that while emergency stock releases may provide short-term relief, the underlying supply pressure will persist. He noted that the world has lost nearly 3 billion barrels of oil supply since the conflict began, with governments releasing around 1 billion barrels from emergency reserves.

The global oil market faces significant challenges in rebuilding inventories, with Nasser estimating that additional demand of around 2 million barrels per day for 18 months will be required to restore stockpiles. The Strait of Hormuz remains a critical chokepoint, as it is the main route for Middle Eastern oil and gas exports. Despite some recovery in exports, the conflict has disrupted normal operations and increased shipping costs, with tanker rates surging to over $1.2 million per day.

Saudi Arabia has some flexibility due to its East-West pipeline, which allows crude to bypass Hormuz. However, Nasser emphasized that additional production alone cannot solve the current problem, as the conflict has also strained pipelines, ports, tankers, insurance systems, and shipping routes. He noted that without the East-West pipeline, Brent crude futures could have reached $200 per barrel. Aramco is exploring additional export routes to reduce dependence on Hormuz.

Despite supply concerns, oil prices have declined from their recent peaks, with Brent crude futures around $102 per barrel and US West Texas Intermediate at approximately $90.62. However, Nasser cautioned that lower prices do not indicate a return to normal market conditions, as higher freight, insurance, and security costs continue to impact delivered crude prices.