Amin Nasser, CEO of Saudi Aramco, in his speech at the "Energy Information Forum" in London, referred to the increasing pressure on crude oil and fuel supply and stated that refilling global storage, which has been used as an emergency measure, may take up to two years.
Disruptions in shipping traffic from the Strait of Hormuz
Since the onset of the U.S. and Israeli regime's war against Iran in late February, shipping traffic from the Strait of Hormuz, one of the world's most critical shipping chokepoints, has been severely disrupted. This disruption has directly impacted global oil supply and heightened concerns in the market.
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G7 agreement to draw from reserves
The G7 countries agreed on October 2 to draw 100 million barrels of diesel and crude oil from strategic reserves and committed not to restrict energy exports. Nasser emphasized that as long as the disruption in traffic from the Strait of Hormuz is not resolved and market confidence does not return, pressure on both sides of the oil market will continue.
He noted that since the beginning of the conflicts, about 3 billion barrels of oil have been removed from global supply, and 1 billion barrels have been drawn from the world's strategic reserves. Refilling these reserves would be equivalent to creating an additional 2 million barrels of demand per day over the next 18 months.
According to Nasser, global daily oil demand is slightly over 100 million barrels per day, and Saudi Arabia's maximum sustainable production capacity is 12 million barrels per day. This capacity will be available within a few days, as the country’s strategic reserves and system flexibility have not been damaged.
Nasser also added that access to a large portion of the approximately 6 billion barrels of stored oil is not possible, as up to 90 percent of it is flowing within pipelines or is necessary to maintain the minimum operational levels of storage tanks. Saudi exports are conducted through the transfer of crude oil from the "East to West" pipeline to terminals located in the Red Sea.
Brent crude oil prices reached about $102 on Monday. Additionally, Brent oil prices had peaked at $126 per barrel in late April. Saudi oil is transported from Red Sea terminals and via the Suez Canal to the north or through the Bab-el-Mandeb Strait to the south.
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