Aramco CEO Amin H. Nasser says the global squeeze on crude oil is serious, with commercial onshore inventories now well below six billion barrels. He ties the pressure to the Hormuz disruption and says refilling stocks while meeting demand could take up to two years.
Aramco President and CEO Amin H. Nasser called the squeeze on global crude oil serious in a speech at the 25th World Petroleum Congress Energy Conference in Riyadh this week. He added that the spike in refined fuel prices is making the challenge even worse. Nasser warned in the speech: "Diesel is currently around $200 per barrel."
Inventories are the last buffer
Nasser said commercial onshore inventories are now well below six billion barrels, calling them the last available buffer. However, he said the vast majority of those barrels are locked up. He described the inventory cushion as barely a cushion at all.
Refilling inventories while meeting demand could take up to two years, according to Nasser. Macquarie strategists, in a report sent to Rigzone, said the current Hormuz crisis had stretched into its eighth month.
Nearly three billion barrels lost
At the Energy Intelligence Forum in London earlier this month, Nasser said the world entered the crisis with almost 10 billion barrels of global oil stocks. Since then, nearly three billion barrels of gross oil supply has been lost, or roughly half the crude and products that would normally have moved through Hormuz over the same period.
Stocks have offset more than one billion barrels of that loss, he said, and most of it came from onshore commercial inventories. As a result, estimates suggest less than six billion barrels of commercial inventories remain, with the vast majority not practically available, Nasser said.
He also pointed to effects beyond energy markets. Ocean freight has been hit hard, supply chains are tight, and people worry about inflation and the availability of essentials, he said.
Aramco studies new export routes
Nasser said Aramco, in alignment with Saudi Arabia's Ministry of Energy, is studying additional crude export routes and working on expanding overseas storage. He said around half the world's proven oil reserves sit in the Middle East, together with more than 90% of its spare production capacity.
Nasser warned that until Hormuz fully re-opens and confidence returns, the pressure across the energy chain will only intensify.
Source: Rigzone
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