Saudi Aramco CEO Amin Nasser: Global Oil Inventory Buffer Has Become Alarmingly Thin, Restocking May Take Two Years
Saudi Aramco CEO Amin Nasser stated at the London Energy Intelligence Forum on Monday that the global oil inventory buffer has become alarmingly thin. Pressure on both crude oil and refined products will intensify until the Strait of Hormuz fully reopens and confidence is restored. Even if the strait reopens, meeting demand while restocking may take up to two years.
He mentioned that since the conflict began, nearly 3 billion barrels of supply have been lost globally, with about 1 billion barrels coming from inventory drawdowns. At the onset of the conflict, inventories were around 10 billion barrels, but commercial inventories have fallen to less than 6 billion barrels, most of which are technically constrained and cannot be accessed. He stated that the system is already tight, and emergency reserves may last through one winter but cannot fill the long-term gap.
Restocking itself will create new demand. He estimates that at least an additional 2 million barrels per day will be needed for the next two years, and if governments raise inventory targets, it could be even more. Another perspective is that restocking all inventories over the next 18 months would equate to an additional demand of 2 million barrels per day. Global daily demand for crude oil is slightly above 100 million barrels. The price increase for refined products has already surpassed that of crude oil.
Aramco's upstream capacity remains intact. Sustainable production capacity is 12 million barrels per day, which he said could be fully released within days. After the east-west pipeline was temporarily shut down due to attacks last month, flow has been restored to about 80%, and crude oil can be routed around Hormuz to the Red Sea. Gulf exports rose to 15.5 million barrels per day last month, the highest since the conflict began, exceeding pre-war levels by 80%. The company is also seeking more export routes and overseas storage, but has not provided specific plans.
This is his first in-person speech since the conflict began. Major economies have released over 300 million barrels from strategic reserves and agreed to continue releasing. He stated that these releases can only buy time. Without east-west pipelines, Brent crude could have reached $200 per barrel, according to him.
This is a supply buffer trade, not a depletion of geological reserves. Buyers are refineries and importing countries that are still consuming commercial inventories, while sellers are Saudi Arabia, which can still release 12 million barrels per day within days. The driving events stem from the incomplete recovery of Hormuz. Capital flows toward available crude oil and refined product price differentials, not toward underground reserves. Beneficiaries are Aramco, which has bypass pipelines and remaining capacity, while those under pressure are importing countries whose inventories have fallen to very thin usable portions.
Source: Public Information
ABAB AI Insight
Amin Nasser is discussing commercial inventories, not underground reserves. The market learned the same lesson after the 1973 embargo and the 1990 Gulf War: prices are determined by shippable barrels and strategic inventories, not by proven reserves. Since its nationalization in the 1980s, Aramco has treated its sustainable production capacity of about 12 million barrels per day as a balancing valve. The restoration of the east-west pipeline to 80% means this balancing valve has been redirected from Hormuz to the Red Sea.
The 2 million barrels per day for restocking is a reverse demand following the loss of nearly 3 billion barrels due to the conflict. About 1 billion barrels have already been drawn from inventories, most of which are commercial stocks held by companies, not government strategic reserves. The strategic release of over 300 million barrels is only referred to as buying one winter. Therefore, capital will not first seek to develop new oil fields but will look to buy routes that bypass the strait, overseas storage, and national oil companies with remaining capacity.
A comparison can be made to the 2022 release of strategic oil reserves by the US and Europe, which pressured prices; after the release ended, inventories were even lower. At that time, the release of about 1 million barrels per day provided a few months of buffer but did not change the supply structure. We are now in a control phase: Gulf exports have returned to over 80% of pre-war levels, but most of the less than 6 billion barrels of commercial inventory cannot be accessed, with pricing power resting on remaining capacity and the strait, not on demand destruction.
Structurally, this represents a shift in pricing power. Crude oil can be partially rerouted, but inventory is the buffer. The mechanism is that commercial inventories are drawn down first, and strategic reserves can only delay the gap. Even after the strait reopens, restocking will still require 2 million barrels per day for up to two years, so resuming navigation does not mean prices will return to pre-war levels.
ABAB News · Cognitive Law
Reserves are underground, prices are in shippable inventories.
Strategic releases buy time, not balance.
After the restoration of routes, restocking remains a new demand.