Global oil stockpiles are “scarily thin” because of the US-Israeli war against Iran, according to the boss of Saudi Aramco, the state-owned oil company.
Chief executive Amin Nasser spoke about the strain on the global energy system, days after G7 nations agreed to release more of their oil stocks to ease supply fears.
Supply resilience cushion 'scarily thin'
In his first in-person speech since the start of the war in late February, he told the Energy Intelligence Forum in London: “The system is already straining. And with precious little else the world can turn to, the supply resilience cushion is scarily thin.”
He warned that it could take a couple of years to replenish oil stocks.
Strait of Hormuz closure impacts
“Until Hormuz fully re-opens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify. Even then, replenishing inventories while meeting demand could take up to two years.”
After the US and Iran launched surprise air strikes on Iran on 28 February, Tehran effectively closed the strait of Hormuz, choking exports through one of the world’s most crucial shipping bottlenecks. Traffic through the strait has dwindled, with only a few vessels attempting to sail through on a daily basis.
Exports largely recover
On a brighter note, it emerged last week that exports of crude from the strait have largely returned to levels seen before the outbreak of the Iran war, as oil producers and the shipping industry have found alternative ways of transporting crucial fuel out of the Middle East.
Pipeline exports and ship-to-ship transfers are among the methods being used, according to analysts tracking the situation, while the US military continues to escort some vessels. However, flows of refined products such as diesel remain constrained, pushing prices higher.
At least 16.5m barrels per day (bpd) left the region in September, according to figures from the global trade intelligence firm Kpler, equalling the pre-war average, excluding Iran. The figure is 10.5m bpd higher than the monthly average for March, during the first weeks of the Iran war.
