Saudi Aramco CEO Nasser: Middle East crisis continues to aggravate supply shock

Saudi Aramco CEO Amin H. Nasser cautioned on Tuesday that the Middle East crisis is intensifying a global supply shock. Nasser estimated that replenishing depleted inventories would take 18 months at an average rate of 2.1 million barrels per day if the Strait of Hormuz remained open. The world has already lost more than 2.6 billion barrels of oil due to the crisis, primarily affecting critical industries.

Aramco's pipeline and global reserves have mitigated the supply shock, reducing net losses to around 1.8 billion barrels. However, the disconnect between futures and physical markets, coupled with stretched global refining systems, suggests that refineries facing unplanned shutdowns could further strain the global energy supply.

Asian countries have already experienced a 6 million barrels per day decrease in crude oil imports during the peak of the crisis. With current trade flows through Hormuz at a tenth of pre-conflict levels, the world will lose over 100 million barrels weekly should the strait close. Nasser remains hopeful for a resolution to restore normal shipping and stabilize the market, but normalization will require time.

Aramco remains committed to utilizing all export routes, including Bab el Mandab, Suez Canal, and Hormuz. Despite the July attacks, Aramco maintains its export capabilities through multiple channels. The WTI Oil price has seen a slight positive movement following Nasser's remarks, trading 1% higher at around $79.50. WTI Oil, or West Texas Intermediate, is a high-quality crude oil widely traded on international markets.

Its value is influenced by supply and demand dynamics, global growth, political instability, OPEC decisions, US Dollar fluctuations, and weekly oil inventory reports. OPEC's production quotas, particularly if reduced, can further tighten supply and drive up Oil prices.