Aramco Chief Warns Global Oil Stocks Are 'Scarily Thin' Amid Two-Year Recovery Timeline

Key points

• Aramco CEO Amin Nasser stated at the Energy Intelligence Forum in London that global oil inventories are 'scarily thin' and the system is straining.
• The conflict has resulted in the loss of nearly 3 billion barrels of gross oil supply, equivalent to half the volume normally moving through the Strait of Hormuz.
• More than 1 billion barrels have been drawn from commercial inventories to offset supply losses, leaving less than 6 billion barrels in storage, most of which are not practically available.
• Nasser estimated that replenishing inventories while meeting global demand could take up to two years, even after the Strait of Hormuz fully reopens.
• The G7 recently agreed to release 100 million barrels of emergency oil and diesel stocks over four months, but Nasser noted this only buys time for the winter and does not fix long-term supply.
• Aramco is exploring additional crude export routes and overseas storage to reduce dependence on individual shipping corridors, with the East-West pipeline restored to 80% capacity.

Background

This warning follows a series of disruptions to the Saudi East-West pipeline, which was attacked in September and is now operating at 80% capacity. Previous coverage indicated that Gulf exports have recovered to 81% of pre-war levels, but physical crude prices remain at their highest since April. The current situation is part of a broader seven-month conflict involving the US, Israel, and Iran, which has severely disrupted shipping through the Strait of Hormuz, a waterway handling 20% of global oil and LNG supplies.

How outlets are covering it

OilPrice.com and CNBC both report Nasser's warnings at the Energy Intelligence Forum, emphasizing the 'scarily thin' nature of inventories and the two-year recovery timeline. CNBC highlights the recent G7 decision to release 100 million barrels of emergency stocks, noting that oil prices were mixed as Middle East crude flows recovered. The Telegraph source was inaccessible due to a security block, so no perspective could be extracted. All accessible sources agree on the severity of the supply squeeze and the limitations of emergency reserves.

Why it matters

The depletion of global oil inventories to less than 6 billion barrels, with most of that stock being unavailable, creates significant vulnerability for global energy markets. The two-year recovery timeline suggests that supply constraints will persist, potentially keeping oil prices elevated and impacting inflation and economic growth. The failure of emergency reserves to provide a long-term solution underscores the need for structural changes in oil supply chains and the strategic importance of the Strait of Hormuz.

What to watch

Markets will monitor the effectiveness of the G7's 100 million barrel release and the pace of recovery in the Strait of Hormuz. Aramco's exploration of alternative export routes and overseas storage will be critical in mitigating future disruptions. Oil prices may remain volatile as investors weigh the short-term relief from emergency stocks against the long-term supply deficit.