Saudi Aramco CEO Nasser: Middle East crisis continues to aggravate historically biggest supply shock

Saudi Aramco CEO Amin H. Nasser said during the European trading session on Tuesday that the ongoing geopolitical crisis continues to aggravate the biggest supply shock in history. Nasser added that the world would be needed 18 months at an average rate of 2.1 million barrels a day to replenish depleted inventories if the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply is open today.

Additional remarks

An average of 11 million barrels of liquids supply removed each day in the face of resilient.

World has lost over 2.6 billion barrels of oil destined to a number of critical industries as a result of crisis.

Aramco's east-west pipeline and global inventories have helped to alleviate supply shock, lowering net loss to around 1.8 billion barrels.

There is a disconnect between futures and physical markets as evident from the strong refining margins that reflect refined product market tightness.

Global refining system is stretched heavily.

If refineries were to suffer any major unplanned or prolonged shutdown the global energy supply system could face more severe pressure.

Countries in Asia have already been affected, with the region's crude oil imports reduced by around 6 million barrels a day at the peak of the crisis.

Beyond refining, current trade flows through the strait of Hormuz are at a tenth of pre-conflict levels and the world will continue to lose more than 100 million barrels for each week the strait is closed.

If strait were open today it would take up to 18 months at an average rate of 2.1 million barrels a day to replenish depleted inventories.

Continues to hope for a resolution that restores normal shipping and stabilizes the market but normalization will take time.