Aramco CEO Warns of Thin Global Oil Inventories
Saudi Aramco CEO Amin Nasser has issued a stark warning regarding the state of global oil inventories amid ongoing geopolitical tensions and supply disruptions. Speaking at the Energy Intelligence Forum in London, Nasser highlighted that the world has lost nearly 3 billion barrels of gross oil supply since the onset of the Iran war. This loss is roughly equivalent to half of the crude oil and products that would normally transit through the strategically vital Strait of Hormuz during this period.
Nasser explained that global oil stocks entered the crisis at about 10 billion barrels but has since seen over 1 billion barrels drawn from inventories to counterbalance the supply deficits. The majority of these barrels have come from onshore commercial stocks, which now have dropped to less than 6 billion barrels. He warned that much of these remaining inventories are not readily accessible, leaving the supply resilience buffer exceedingly thin.
“The system is already straining,” Nasser said, emphasizing the precarious nature of current oil supplies. He underscored the limited alternatives available to the global energy market to meet ongoing demand, reinforcing the risk of future supply shocks.
Among the measures helping to alleviate some pressure is Saudi Arabia’s East-West pipeline, which transports crude oil from the eastern oil fields to the Red Sea, effectively bypassing the Strait of Hormuz. Nasser stated that this pipeline had mitigated a potential spike in Brent crude prices, which could have reached $200 per barrel if not for this alternate route. The pipeline’s flow capacity has been restored to about 80% following recent attacks.
Looking ahead, replenishing global oil inventories to comfortable levels could take up to two years, even after full reopening of the Strait of Hormuz. Nasser pointed out that while emergency oil stock releases, such as the recent G7 pledge to release up to 100 million barrels of emergency oil and diesel stocks, might provide short-term relief through this winter, they do not address long-term supply challenges.
In response to ongoing risks, Aramco is exploring additional export routes and increasing overseas storage facilities to minimize dependency on singular shipping corridors. Nasser also affirmed that Aramco could ramp up its sustainable production capacity to its full 12 million barrels per day within days if required.
The warnings from Aramco come amidst a complex global energy landscape, where geopolitical conflicts and demand dynamics continue to challenge supply stability, underscoring the critical importance of strategic energy planning and diversification.
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