Aramco Warns of Scarily Thin Global Oil Stockpiles

Amin Nasser, CEO of Aramco, warned that global oil stockpiles are alarmingly low, with rebuilding inventories potentially taking up to two years. He noted that nearly 3 billion barrels of supply have been lost since disruptions in the Strait of Hormuz began due to the US-Iran conflict. Around 1 billion barrels have been drawn from stocks, while 6 billion are in storage, though most of these reserves are not practically accessible.

Nasser highlighted that the oil system is already under strain, with the supply resilience cushion described as 'scarily thin'. He also pointed out that the International Monetary Fund expects global economic growth to slow to 2% next year, with inflation likely rising above 6%. The longer the disruption persists, the higher the risk becomes, he cautioned.

Aramco is exploring alternative routes for crude exports and additional overseas storage to mitigate short-term disruptions. Earlier, Patrick Pouyanne, CEO of TotalEnergies, mentioned Saudi Arabia's efforts to build a pipeline to Duqm, home to Oman's largest oil refinery. Nasser noted that Brent crude futures could have surged to $200 per barrel without the East-West pipeline, which allows Saudi Arabia to ship oil to its Red Sea terminals.

Despite recent challenges, including a drone attack on the East-West pipeline, Saudi Arabia's exports have rebounded to their highest level since the Iran war began. Brent crude futures slipped 0.76% to $101.50 per barrel on Monday, while West Texas Intermediate futures fell 1.16% to $90.05. Both benchmarks have risen nearly 40% since the start of the year.