Saudi Aramco Chief Warns Rebuilding Global Oil Stocks Could Take Two Years

Saudi Aramco Chief Executive Amin Nasser has warned that rebuilding depleted global oil inventories could take as long as two years, as disruptions linked to the continuing U.S. Iran conflict put additional pressure on energy supplies.

Speaking at an energy conference in London, Nasser said the global oil market was facing pressure on both supply and inventories. He warned that the situation could become more difficult if the conflict continues to disrupt production and transportation across the Middle East.

According to Nasser, nearly 3 billion barrels of oil supply have been lost since the conflict began, while about 1 billion barrels have been taken from existing inventories to help offset the shortfall.

The comments underline the scale of the challenge facing energy markets. Even if production and exports begin returning to normal, restoring global stockpiles to previous levels could require a prolonged period of stable supply.

A key factor in the current situation is the Strait of Hormuz, one of the world’s most important energy shipping routes. Nasser said pressure on oil markets would remain elevated until the waterway fully reopens and confidence returns to global energy markets.

The strait is critical to international oil trade because large volumes of crude and other energy products pass through the narrow route each day. Any prolonged disruption can have consequences far beyond the Middle East by tightening supplies and increasing uncertainty for import dependent economies.

Oil prices have recently shown signs of easing as some crude flows from the region recover. Shipments through the Strait of Hormuz have increased, while Saudi Arabia’s East West pipeline has also helped maintain alternative routes for moving crude to export terminals.

However, the recovery in physical oil flows has not eliminated concerns about the broader supply situation. The amount of oil already removed from global inventories means markets could remain vulnerable to further disruptions.

Nasser’s warning suggests that rebuilding those reserves will be a gradual process rather than an immediate consequence of renewed production. If supply disruptions continue, the time required to restore inventories could become even longer.

Energy markets are therefore closely watching developments in the Middle East, particularly the reopening of major shipping routes and the restoration of confidence among traders and producers.

The outlook for oil prices will depend on how quickly disrupted production and exports return to normal and whether additional supplies can reach international markets without further interruptions.

For major oil consuming nations, depleted inventories also create a significant buffer issue. Strategic and commercial stocks are designed to provide protection during periods of supply disruption, but prolonged withdrawals can reduce that cushion and leave markets more exposed to future shocks.

Nasser’s assessment points to a potentially lengthy recovery for the global oil market, even if current disruptions begin to ease. The ability to rebuild inventories will depend on sustained production, reliable transportation routes and a return of stability to one of the world’s most important energy producing regions.

Courtesy: cnbc