Global oil stocks are alarmingly low and could take two years to rebuild, Aramco warns

Saudi Aramco's chief executive has sounded the alarm over dwindling global oil reserves. The company's CEO, Amin Nasser, highlighted how the ongoing Iran conflict has further depleted stocks that were intended to buffer against future supply shocks. The effective shutdown of the Strait of Hormuz, a crucial conduit for 20% of global oil and natural gas shipments, has exacerbated the situation, causing price hikes and energy shortages worldwide.

Speaking at the Energy Intelligence Forum in London, Nasser emphasized that the global oil stockpile situation is already under severe strain. With limited alternatives, the cushion of supplies is dangerously thin, he warned. While G7 nations and the International Energy Agency (IEA) recently agreed to release 100 million barrels of diesel and crude oil to stabilize supplies, Nasser cautioned that the actual amount of oil that can reach markets is far less, constituting only about 10% of total reserves.

As of the start of the crisis, global oil inventories were estimated at 10 billion barrels. However, nearly 3 billion barrels have been lost since then, representing half of the usual oil flowing through the Strait of Hormuz. Over 1 billion barrels have been drawn from commercial reserves to compensate for these losses, with the majority coming from onshore inventories.

Nasser described these remaining stocks as the last major resource for the market, warning that only less than 6 billion barrels are presently accessible. He pointed out that while tapping these reserves can provide temporary relief, it does not address the underlying long-term imbalance between supply and demand. Rebuilding inventories once the Strait of Hormuz is fully reopened could take up to two years, during which regional exports have begun to rebound, with 40% now bypassing the Strait of Hormuz and utilizing alternative routes like Saudi Arabia and the UAE's pipelines.