Oil prices could have hit $200 a barrel if not for East-West pipeline, Aramco chief says

Saudi Aramco's chief executive Amin Nasser stated that if the East-West pipeline had not existed, Brent crude prices could have soared up to $200 per barrel. Speaking at the Energy Intelligence conference in London, Nasser highlighted the company's ability to utilize its maximum sustainable production capacity of 12 million barrels per day within days.

The Saudi firm boasts strategic reserves and the flexibility to isolate or adjust output as required. Over the past month, Brent crude, the benchmark for two-thirds of the world's oil, has hovered around $100 per barrel. Saudi Arabia has significantly contributed to this surge by increasing crude shipments from its primary export terminal at Ras Tanura.

Following a temporary halt to the main cross-country pipeline after an attack last month, the East-West pipeline has since regained about 80% of its capacity, enabling more oil to be shipped from the Red Sea. Aramco has been relying on international storage and swiftly repairing damaged infrastructure throughout the conflict. The company is actively seeking alternative crude export routes and additional international storage facilities to reduce dependence on a single method of reaching global buyers.

However, the oil reserves that buffer the world from supply disruptions have dwindled to "scarily thin" levels, potentially intensifying pressure at both ends of the barrel until the Strait of Hormuz reopens. Nasser emphasized that while releasing emergency oil and diesel stockpiles will provide economies with some respite, it will not resolve the imbalances between supply and demand.

Reopening the critical shipping chokepoint at Hormuz could take up to two years for energy-consuming countries to replenish their stockpiles, according to Nasser. Despite Gulf producers ramping up production and exports, oil markets continue to price in security risks in the Gulf and Red Sea.