Aramco CEO warns oil stockpiles are ‘scarily thin’

The world's oil stockpiles have shrunk to "scarily thin" levels, and pressure on markets will keep building until the Strait of Hormuz fully reopens, Saudi Aramco Chief Executive Amin Nasser said on Monday, October 5.bloomberg+1

Nasser spoke at the Energy Intelligence Forum in London, a two-day meeting running October 5 and 6. His remarks came days after governments of the world's biggest economies announced plans to release up to 100 million barrels of emergency oil and diesel stocks to bring down rising fuel costs. He said those releases would buy economies time but would not fix the gap between supply and demand.ndtvprofit+2

"The system is already straining"

"Until Hormuz fully re-opens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify," Nasser said, according to Reuters and Bloomberg. "Even then, replenishing inventories while meeting demand could take up to two years."reuters+1

He said refined fuel prices had risen even faster than crude. Reuters reported that Nasser put supply lost since the conflict began at almost 3 billion barrels, with about 1 billion barrels released from stocks. Most of that drawdown came from commercial inventories, he said, and the roughly 6 billion barrels still in storage are "not practically available." According to the Financial Times, he said the lost supply equals about half of the crude and refined fuels that would normally have passed through Hormuz over the same period.ndtvprofit+3

Exports recover, prices hold near $100

The strait has been at least partly blocked since the United States and Israel attacked Iran at the end of February, which set off a regional war. Saudi Arabia, the United Arab Emirates and Kuwait have used their own tankers to move crude through the waterway, and Gulf exports are now close to pre-war levels. Even so, Brent crude has traded around \$100 a barrel over the past month because markets are still pricing in security risks in the Persian Gulf and the Red Sea.ndtvprofit

Aramco has increased shipments from its Ras Tanura terminal in the Gulf. An attack last month briefly shut its East-West pipeline, and flows on that line are now back to about 80% of capacity, which frees up more oil to ship from the Red Sea. Nasser said the company kept supplies steady by drawing on international storage and repairing damaged infrastructure quickly. He did not mention reports of recent attacks on the kingdom. He said Aramco is looking for other export routes and more overseas storage so it does not depend too heavily on any single route to buyers.ndtvprofit