Saudi Aramco CEO Warns Global Oil Supply Buffer Is Dangerously Thin

Deep News
59 mins ago

Amin Nasser, Chief Executive of Saudi Aramco, said in London on Monday that oil inventories that serve as a global buffer against supply shocks have become "frighteningly thin," and that market risks could intensify further unless the Strait of Hormuz reopens.

His remarks came just days after the Group of Seven (G7) nations and their partners decided to release up to 100 million barrels of emergency oil and diesel reserves to ease rising fuel costs.

"Until the Strait of Hormuz is fully reopened and market confidence is restored, the harsh reality is that price pressure will intensify on both the crude and refined products sides," Nasser said at the Energy Intelligence Forum in London. "The tightness in crude supply is already severe, but refined product prices have risen even more."

Nasser said the release of reserves would buy economies some time, but would not resolve the imbalance between supply and demand. He said that even if the Strait of Hormuz, a critical shipping chokepoint, were reopened, energy-consuming nations could take as long as two years to replenish their inventories.

Gulf oil-producing countries are working to raise output and exports, and have succeeded in lifting crude shipments to near pre-war levels. Saudi Arabia and its neighbors such as the United Arab Emirates and Kuwait have been using tankers to transport crude through the Strait of Hormuz. Shipping through the strait has been disrupted since the United States and Israel attacked Iran at the end of February, triggering a regional war.

Despite the increase in crude flows, the relief for the oil market has been limited, as the market continues to digest security risks to supplies from the Persian Gulf and the Red Sea. Over the past month, the international benchmark Brent crude price has held at around $100 per barrel, even with more tankers passing through the Strait of Hormuz.

Saudi Arabia is a key factor behind the rise in crude exports. Over the past month, Saudi Aramco has increased crude loadings from Ras Tanura, its main export terminal in the Persian Gulf. The company responded swiftly after last month's attacks temporarily halted operations on its main cross-country pipeline. Since then, Saudi Aramco has restored throughput on its east-west pipeline to about 80% of capacity, meaning the company can also ship more oil from the Red Sea.

Nasser said Saudi Aramco relied on international storage facilities and quickly repaired damaged infrastructure, demonstrating the resilience of its oil supply during the conflict. He did not mention recent reports of attacks on Saudi Arabia in his speech. He said Saudi Aramco is looking for alternative crude export routes and more international storage facilities to avoid over-reliance on any single channel for reaching global buyers.

As of press time, WTI crude oil futures were down 0.55% at $90.61 per barrel, while Brent crude oil futures were up 0.10% at $102.35 per barrel.

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