Oil Market Braces for Long-Term Shortage Amid Middle East Conflict

The global oil market is facing a severe shortage due to the ongoing conflict in the Middle East. According to Saudi Aramco's CEO, Amin Nasser, more than 2.6 billion barrels of oil have been lost since February, which is equivalent to nearly a month of normal global crude production.

This disruption has led to a significant increase in prices for crude oil, refined products, and chemicals. Aramco reported a 44% increase in net profit to $32.69 billion in the three months to June 30. The company was able to reroute shipments away from the Strait of Hormuz, but Nasser warned that global inventories are running low.

Nasser stated that if the strait were to open today, it would take up to 18 months at an average rate of 2.1 million barrels a day to replenish depleted inventories. The supply disruption could widen further as Iran-aligned Houthi forces announced a blockade of Saudi Arabia's oil industry last month.

Nasser expressed concern that the continued disruption and threat to shipping through the Bab el-Mandeb Strait could have a significant long-term impact on the world economy. He noted that the industry has few buffers to absorb further disruptions and that any major unplanned or prolonged refinery outage could add pressure to global energy supplies.