Saudi Aramco chief executive Amin Nasser says refilling global crude oil and fuel stockpiles could take up to two years, even after the Strait of Hormuz reopens. Almost 3 billion barrels of supply have been lost since the Iran war began, and the G7 agreed Friday to release 100 million barrels from emergency reserves.
Saudi Aramco's chief executive warned Monday that refilling the world's crude and fuel stockpiles could take up to two years, even once the Strait of Hormuz fully reopens. Pressure at both ends of the barrel will intensify until then, Nasser told the Energy Intelligence Forum in London.
Iran effectively closed the Strait of Hormuz following the start of the US-Israeli war on Iran at the end of February, choking exports through one of the world's most crucial shipping bottlenecks. Under pressure from US President Donald Trump, the Group of Seven agreed Friday to release 100 million barrels of diesel and crude oil from emergency reserves and pledged not to restrict energy exports.
According to Reuters, Nasser said in his first in-person speech since the start of the Iran war: "The system is already straining."
Nearly 3 billion barrels of supply lost
Almost 3 billion barrels of oil supply have been lost since the conflict started, Nasser said, and 1 billion barrels have been released from global stocks in response. Refilling all inventories would equate to an extra 2 million barrels per day of demand over the next 18 months, against global daily oil demand of just over 100 million bpd.
Spare capacity and new export routes
Saudi Arabia's maximum sustainable production capacity of 12 million bpd could be made available within days, Nasser said, since its strategic reserves and system flexibility have remained intact. But much of the remaining 6 billion barrels or so in storage is not practically available, he said, as up to 90% sits in pipelines or is needed to keep storage tanks at minimum operating volume.
Aramco is studying additional export routes beyond the Strait of Hormuz and making more use of overseas storage to cover short-term disruptions, Nasser said. Its East-West pipeline moves oil to Red Sea terminals, and without it, Brent crude futures would have hit $200 per barrel, he said.
On Monday, Brent futures traded around $102 per barrel, down from a high of $126 per barrel at the end of April, when nervousness about supply disruption was even higher.
Oil flows through the East-West pipeline have not been interrupted, a source told Reuters Monday, despite media reports of disruption from hostilities between Saudi Arabia and Yemen's Houthis. Saudi Arabia is also considering expanding the capacity of the 7 million bpd pipeline, Reuters sources said.
Aramco is meeting customer requirements and developing a fourth and fifth export route, Nasser told the conference. Multiple, adaptable export routes already cut the risk that a single chokepoint can paralyse the system, he said.
Source: Investing.com
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