Key facts
- Global oil inventories are 'scarily thin' due to nearly 3 billion barrels of supply loss since the Iran war.
- Less than 6 billion barrels remain in commercial oil inventories, with much of it not practically available.
- The world entered the crisis with almost 10 billion barrels of oil stocks.
- Replenishing inventories while meeting demand could take up to two years.
- Aramco is exploring additional crude export routes and overseas storage.
- Aramco can make its full 12 million bpd of sustainable production capacity available within days.
Saudi Aramco CEO Amin Nasser warned on Monday that global oil inventories are critically low, with nearly 3 billion barrels of gross oil supply lost since the Iran war began. This loss is equivalent to roughly half the crude and products that normally would have moved through the Strait of Hormuz during the same period.
Nasser stated that the world entered the crisis with almost 10 billion barrels of oil stocks, but more than 1 billion barrels have since been drawn down to offset supply losses. He noted that most of these drawdowns came from onshore commercial stocks, leaving less than 6 billion barrels in commercial inventories, a significant portion of which is not practically available. "The system is already straining," Nasser said at the Energy Intelligence Forum in London. "And, with precious little else the world can turn to, the supply resilience cushion is scarily thin."
He also suggested that Brent crude could have reached $200 per barrel without Saudi Arabia's East-West pipeline, which bypasses the Strait of Hormuz. Aramco has reportedly restored flows on this pipeline to about 80% of capacity following a recent attack. Nasser indicated that replenishing inventories while continuing to meet global demand could take as long as two years, even after the Strait of Hormuz fully reopens.
Nasser's warning comes after the G7's decision to release up to 100 million barrels of emergency oil and diesel stocks over the next four months. International Energy Agency (IEA) members have already released approximately 325 million barrels of the 400 million barrels pledged in March, though it remains unclear how much of the new G7 commitment is additional. "Emergency reserves might buy us a winter," Nasser commented. "They cannot fix long-term supply."
Saudi Aramco is currently studying additional crude export routes and more overseas storage to reduce its dependence on individual shipping corridors. Nasser added that the company can make its full 12 million barrels per day of sustainable production capacity available within days.