Amin Nasser, CEO of Aramco, warned about the alarming state of global oil reserves in his latest speech at the "Energy Intelligence Forum" in London. He announced that the seven-month war between the U.S. and Israel against Iran has reduced oil supply from this region by "nearly 3 billion barrels"; a figure that is almost equivalent to half of the volume of crude oil and refined fuels that passed through the Strait of Hormuz during this period.
Decrease in Reserves and Withdrawal from Strategic Reserves
Amin Nasser added that to compensate for this shortfall, over one billion barrels of oil have been withdrawn from reserves. Governments have released more than 300 million barrels from their strategic reserves and agreed last Friday to free up more quantities. However, Nasser noted that the majority of the oil supplied has come from corporate reserves; companies that effectively had the "last available tool" at their disposal.
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Alarming State of Commercial Reserves
The CEO of Aramco estimated that "today, less than 6 billion barrels of commercial reserves remain, most of which are practically inaccessible." He continued that this system is currently under severe pressure and given that few options remain for the world, the safety margin and resilience of oil supply have dropped to a critically alarming and low level. His warnings emphasize the damage inflicted on the global oil market due to these conflicts.
The cost of shipments from the Gulf region has been very high, and the oil market continues to face severe supply shortages; so much so that the price of physical North Sea crude oil shipments for delivery this month has reached its highest level since April. According to the Financial Times, Nasser stated that even after the conflicts end, replenishing reserves alongside meeting demand may take up to two years, urging governments to focus more on energy security and resilience.
He also added that Aramco is exploring alternative routes for exporting Saudi crude oil and identifying additional storage facilities abroad to protect customers against potential disruptions in the future.
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