Global oil inventories have fallen so low that industry executives say the market has lost its buffer against supply shocks. Saudi Aramco's CEO says fewer than six billion barrels of commercial stocks remain, with most not practically available, while the International Energy Agency prepares a fresh release to ease diesel prices.
The world has nearly exhausted the spare stockpiles it leans on during supply shocks, industry executives said this week, leaving the market more exposed to price spikes.
Saudi Aramco CEO Amin Nasser told the Energy Intelligence Forum in London that fewer than 6 billion barrels of commercial inventories remain worldwide, with most of that volume not practically available. Governments and energy companies have drawn down reserves this year to offset supply disruptions from the wars in the Middle East and Ukraine.
More than a billion barrels already released
More than 1 billion barrels have been released, mainly from onshore commercial inventories, since the start of this year's Middle East crisis, Nasser said, calling it the last major tool in the box. The International Energy Agency, which coordinates the West's strategic reserves, is now preparing to release 100 million barrels of crude and diesel to ease soaring diesel prices.
According to Nasser: "It took a lot of negotiations, but it is 100 million." He added that inventories are reaching a stress level, with only 10% or less available — which is why the agency is struggling to assemble even that volume.
Buffers thin as demand holds near 102 million barrels a day
World oil demand stands at about 102 million barrels per day, according to the IEA. Chevron CEO Mike Wirth said the loss of the market's buffers has made it more fragile and has raised oil's price floor.
Executives at the conference said the turmoil will extend beyond next year, because refilling inventories on top of meeting demand could take years. Kuwait Petroleum Corporation CEO Shaikh Nawaf Al-Sabah said his company is working to build storage domestically and at its overseas refineries. Meanwhile, Vitol CEO Russell Hardy said the market is relying on seaborne oil exports from the Middle East to keep supply balanced through winter, since the West has no further inventories to draw down.
Natural gas faces the same squeeze
Stocks in the U.S. Strategic Petroleum Reserve are at their lowest level since October 1982, according to Department of Energy data. Natural gas inventories are also depleted, leaving prices vulnerable to spikes. Petronas CEO Tengku Muhammad Taufik said a bad winter could bring a sharp downturn to the gas market in the first quarter of 2027 if storage hits minimal levels.
Source: Investing.com
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