ARAMCO SAYS THE WORLD HAS LOST 3 BILLION BARRELS AND THE STOCKS WILL NOT BE BACK FOR TWO YEARS

The head of the world’s largest oil company told a London forum on Monday that the barrels lost since the Iran war will not be replaced quickly, and that emergency stocks can buy a winter, not a recovery.

Amin Nasser, president and chief executive of Saudi Aramco, spoke at the Energy Intelligence Forum. It was his first in-person speech since the war began. “The system is already straining,” he said. “And, with precious little else the world can turn to, the supply resilience cushion is scarily thin.”

His arithmetic was specific. The world entered the crisis with almost 10 billion barrels of oil stocks. Since then, nearly 3 billion barrels of gross supply have been lost, about half the crude and products that would normally have moved through the Strait of Hormuz in the same period. More than 1 billion barrels have been drawn from those stocks, mostly from onshore commercial inventories. He said estimates now put commercial inventories below 6 billion barrels, and that most of what remains is not practically available.

“Until Hormuz fully reopens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify,” Nasser said. “Even then, replenishing inventories while meeting demand could take up to two years.” Refilling the draw, he said, would equal about 2 million barrels a day of extra demand over 18 months, against global demand a little above 100 million barrels a day. “Emergency reserves might buy us a winter. They cannot fix long-term supply.”

He said Brent could have reached $200 a barrel without Saudi Arabia’s East-West pipeline, which moves crude from the eastern fields to the Red Sea and bypasses Hormuz. Aramco has restored flows on that route to about 80 percent of capacity after an attack last month, The National reported. Nasser said the company’s sustainable capacity of 12 million barrels a day could be made available within days. He also said Aramco is studying extra export routes and more overseas storage. OPIS reported he described a fourth and fifth route as still at the feasibility and engineering stage, beside the Gulf, the Red Sea and the Mediterranean.

The products warning came from Kuwait. Sheikh Nawaf Al-Sabah, chief executive of Kuwait Petroleum Corporation, told the same forum that crude supplies are ample and refined products are not. He estimated the market is short about 6 million barrels a day of refined products, and said the company must prioritise shipping products out of the Gulf to ease refinery bottlenecks. Bloomberg reported Kuwait is pumping about 2 million barrels a day, roughly 75 percent of the 2.6 million it produced before the war. Output fell below 1 million a day in the early months, when shipping through Hormuz was blocked. He said KPC is in talks with Saudi Arabia and the United Arab Emirates on pipelines to their ports, and is on track for a 4 million barrel a day capacity target by 2035.

Reuters reported Brent trading above $100 a barrel as the remarks landed. The G7 had announced a 100 million barrel release from strategic reserves days earlier. Nasser’s point was that a release of that size does not refill a draw measured in billions.

None of the timelines is a forecast with a date. Nasser’s two years starts only after Hormuz is fully open and buyers trust the route again. Nawaf’s 6 million barrel product gap is his company’s estimate, not an official OPEC figure. What both told the room is that the shortage is no longer only a shipping story. Crude can move. Diesel, gasoline and jet fuel cannot, at the old rate, and the stocks used to cover the gap are the ones they say are thin.