Saudi Aramco CEO Warns of Alarming Low Global Oil Inventories

Saudi Aramco CEO Amin Nasser has issued a stark warning about the precariously low levels of global oil inventories, describing them as "alarmingly low." He highlighted that the closure of the Strait of Hormuz could further escalate risks to the oil market. Nasser made these remarks during the Energy Intelligence Forum in London, emphasizing that even releasing a portion of the remaining global stockpiles would only provide temporary relief without addressing the fundamental supply-demand imbalance.

Saudi Aramco has taken steps to mitigate risks by employing ship-to-ship transfers near the Gulf of Oman. This method involves smaller tankers loading crude oil in the Persian Gulf, transiting the Strait of Hormuz, and then transferring the cargo to larger vessels waiting offshore. Despite these efforts, Nasser warned that upward and downward pressures on oil prices would intensify until the Strait of Hormuz is fully reopened and market confidence is restored.

The company has also adjusted its pricing strategy to capture market share. Saudi Aramco raised the prices for European customers by $3 per barrel in November while widening the discount on its Asian-bound cargoes to $5 per barrel below the Dubai/Oman benchmark. This move reflects the company's efforts to expand its crude-oil sales in Asian markets.

Nasser noted that global oil demand could increase by at least 2 million barrels per day over the next two years, further straining already tight supplies. He also mentioned that Saudi Aramco is exploring alternative export routes and considering expanding its storage capacity to reduce reliance on any single mode of transportation.