Aramco Warns of Thin Oil Stockpiles and Two-Year Recovery Timeline

Amin Nasser, CEO of Aramco, has warned that global oil stockpiles are dangerously low, putting markets at risk until the Strait of Hormuz fully reopens. Brent crude has been trading around US$100 a barrel, and the disruption in the Strait has caused significant supply chain challenges. Nasser's comments come as governments of the world's largest economies plan to release up to 100 million barrels of emergency oil and diesel stocks to ease rising fuel costs.

Nasser emphasized that even after the Strait of Hormuz reopens, it could take as long as two years for energy-consuming countries to fully replenish their stockpiles. He noted that refined fuel prices have risen even more sharply than crude oil prices. Despite efforts by Gulf oil producers to increase production and exports, the market remains volatile due to security risks in the Persian Gulf and Red Sea.

Aramco has been working to mitigate the impact of the conflict by relying on international storage and repairing damaged infrastructure. The company has also been exploring alternative crude export routes to avoid dependency on any single method. Additionally, Aramco has cut prices for Asian buyers to the lowest in six years, offering Arab Light crude oil at a discount of US$5 a barrel to the Dubai/Oman benchmark.

The cost of booking a large crude carrier from the Gulf to China has surged to US$1.2 million a day, compared to around US$80,000 a day a year prior. Despite these challenges, Aramco has kept prices unchanged for buyers in the US. The company's key partners include TotalEnergies, Sinopec, and S-Oil, with whom it collaborates on various refining and petrochemical projects.