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Oil prices dipped slightly on Monday, suggesting traders are weighing improving Hormuz shipping and near-prewar output more heavily than Nasser’s inventory warning. That reaction may understate the risk: with usable stocks this thin, any fresh disruption would land on a market with almost no buffer, raising the odds of sharp upside price spikes. The case for a tighter-for-longer market also challenges futures curves that price a return to normal next year. Refined products look the more acute pressure point, with fuel prices outpacing crude, regional refining capacity impaired and Chinese fuel exports halted, keeping diesel and gasoline cracks supported.
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Earlier:
- Crude oil technicals: Middle east tension has crude oil futures moving higher.What next technically?
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The barrels are flowing again, but Aramco’s chief says the world has spent its savings and will need two years of overtime to rebuild them.
Summary:
- Aramco CEO Amin Nasser says rebuilding global oil inventories could take up to two years after Hormuz fully reopens.
- He says less than 10% of world oil inventories are practically available, and called stockpiles “scarily thin”.
- About 3 billion barrels of supply have been lost since the Iran war began, and more than 1 billion barrels have been drawn from stocks.
- The world needs an extra 2 million barrels a day over 18 months to rebuild inventories, he estimates.
- Production is nearing prewar levels, but Middle East refinery damage is keeping fuel prices rising faster than crude.
- Aramco says it can produce 12 million barrels a day and is adding export routes, storage and ship-to-ship capacity.
Saudi Aramco chief executive Amin Nasser has warned that rebuilding the world’s depleted oil inventories could take up to two years, even after the Strait of Hormuz fully reopens and confidence returns to energy markets.
Speaking at the Energy Intelligence Forum in London on Monday, Nasser described global stockpiles as scarily thin and said less than 10% of the world’s oil inventories are currently practically available. Of roughly 10 billion barrels held in global stocks when the crisis began, he said less than 6 billion remain as commercial inventory, and most of that cannot realistically be drawn on.
The scale of the drawdown underlines how much the market has relied on stored barrels to cope with the disruption. Nasser said around 3 billion barrels of supply have been lost since the war in Iran began, while more than 1 billion barrels have been released from stockpiles to fill the gap, largely from onshore commercial storage. He characterised those releases as the last major tool available to the market. To rebuild stocks while meeting ongoing demand, he estimated the world would need an additional 2 million barrels a day of supply over the next 18 months.
The warning comes as oil production approaches prewar levels and shipping through Hormuz has improved, helped by weaker Iranian military capabilities and stepped-up US naval security. Nasser said damage to refining infrastructure across the Middle East continues to limit how much crude can be turned into fuel, and that refined product prices have risen more sharply than crude. He warned that pressure at both ends of the barrel would intensify until Hormuz reopens fully. Chinese refiners have also suspended fuel exports to protect domestic supplies.
Aramco says it could produce 12 million barrels a day if required and is developing additional export routes, overseas storage and ship-to-ship transfer capacity to reduce reliance on any single corridor. Nasser called for closer cooperation between producers and consumers on emergency planning, arguing that oil remains central to energy security.
His comments suggest that even a full reopening of Hormuz may not quickly ease market tightness, with depleted inventories leaving the market with little cushion against any further disruption for some time.
This article was written by Eamonn Sheridan at investinglive.com.
