Saudi Aramco Chief Executive Amin Nasser said that global oil inventories have been sharply depleted by the Middle East conflict and could take as long as two years to rebuild, even after flows through the Strait of Hormuz normalize.
Speaking on Monday at the Energy Intelligence Forum in London, Nasser said the world entered the crisis with almost 10 billion barrels of oil stocks. Gross oil supply lost nearly 3 billion barrels of oil, or roughly half the crude and refined products that would normally have moved through Hormuz over the same period, he said.
More than 1 billion barrels have been drawn from stocks to offset the shortfall, mostly from onshore commercial inventories, Nasser said. Estimates suggest less than 6 billion barrels of commercial inventories remain, with most of those barrels not practically available, leaving the global supply cushion "scarily thin," he said.
The comments come days after the Group of Seven countries agreed to implement a coordinated release through the International Energy Agency of 100 million barrels over four months, including a front-loaded diesel release during the first 20 days. The IEA said around 325 million barrels of the 400 million barrels pledged under its March collective action have already been released.
The IEA said Middle East crude exports have recovered significantly, but refined-product flows remain severely constrained. Renewed vessel attacks around Hormuz are also threatening the recent recovery in regional crude shipments, with seven attacks reported since Sept. 28, The Wall Street Journal reported.
Since the Middle East war began on Feb. 28, Iran has targeted vessels to restrict shipping through the Strait of Hormuz, once the thoroughfare for a fifth of the world's oil. Though exports from the region have risen back to around prewar levels, security risks remain elevated.
Nasser said emergency reserves could provide temporary relief but wouldn't resolve longer-term supply constraints. Aramco is also studying additional crude-export routes and more overseas storage to help manage short-term disruptions, he said.