Aramco broadens export options as Hormuz strain persists

Saudi Aramco is exploring new crude export routes and increasing storage abroad as ongoing disruptions to the Strait of Hormuz create dangerously thin buffers in the global oil system, according to the company's chief executive Amin Nasser. Speaking at the Energy Intelligence Forum in London, Nasser described the current situation as the most severe energy supply shock of his career, warning that temporary emergency releases could not resolve a lasting imbalance between supply and demand.

Aramco's existing resilience measures, such as overseas storage, spare production capacity, and multiple crude grades, have helped maintain deliveries, but the company is now studying additional export routes to further safeguard its operations. The restoration of the East-West Pipeline, a crucial bypass linking oil-producing regions to the Red Sea's Yanbu export hub, has become even more vital as it allows Saudi crude to circumvent Hormuz, a strait frequently targeted in the ongoing conflict involving the United States, Israel, and Iran.

Nasser noted that while the world started the crisis with almost 10 billion barrels of oil stocks, it has since lost nearly three billion, leaving roughly six billion barrels in commercial inventories, many of which are not readily accessible to the market. The situation extends beyond crude, with refined fuel prices rising sharply, emphasizing the need for efficient delivery of energy resources to their intended locations.

Industry executives echoed concerns about transport constraints, with Vitol's Russell Hardy highlighting drops in crude and refined product shipments through the Middle East due to higher tanker costs and logistical bottlenecks. The US Energy Information Administration recently raised its fourth-quarter Brent crude forecast to an average of $105 a barrel, citing dwindling global inventories and persistent Middle East supply disruptions.