Globally, the squeeze on crude oil is serious.
That’s what Aramco President and CEO Amin H. Nasser stated in a speech at the 25th World Petroleum Congress (WPC) Energy Conference in Riyadh, Saudi Arabia, this week, adding that the spike in refined fuel prices was “making the challenge even worse”.
“Diesel is currently around $200 per barrel,” Nasser warned in the speech, which was transcribed on Aramco’s website.
“Commercial onshore inventories are now well below six billion barrels, and they are the last available buffer,” he added.
“If that is not scary enough, the vast majority of these barrels are locked up,” he said.
Nasser went on to warn that the inventory “cushion” is “barely a cushion at all”, noting that it can “never be a permanent solution to energy security”.
“Until Hormuz fully re-opens and confidence returns, the pressure across the energy chain will only intensify,” he said.
Nasser highlighted in the speech that refilling inventories while meeting demand could take up to two years.
In an oil and gas report sent to Rigzone by the Macquarie team on Friday, Macquarie strategists, including Macquarie Energy Strategist Walt Chancellor, highlighted that the “current Hormuz crisis” had stretched into its eighth month.
Two Responsibilities
In his speech, Nasser went on to state that Aramco has two “equally important responsibilities”.
“First, to help provide reliable and affordable energy to customers here and around the world,” he noted.
“And, second, to help sustain the energy foundation of the Kingdom’s economy and continued growth,” he added.
Nasser went on to state that resilience “that is designed, engineered, and built long before a crisis is therefore crucial”.
“No single pipeline, facility, technology, or capability can deliver it,” he warned.
Nasser said Aramco’s strength lies in “integrated layers”, which he described as “rigorous facility standards, the operational flexibility of spare capacity and diverse export routes, and the digital protection required in an age of cyber vulnerability”.
The Aramco CEO went on to reveal in the speech that, in alignment with Saudi Arabia’s Ministry of Energy, Aramco is studying additional crude export routes and working on expanding overseas storage.
“We are also focused on mitigating risks and limiting damage, using frontier technologies to inspect facilities and accelerate restoration,” he revealed.
“Then there is financial strength, which allows us to continue investing with discipline through difficult cycles,” he added.
Energy Transition, Energy Security
Touching on the theme of this year’s WPC – Pathways to an Energy Future for All – Nasser went on to note in his speech that energy transition pathways will differ by country, “with oil and gas remaining at the core of the global energy mix”.
“This crisis reinforces the need for practical, resilient pathways,” he said.
“Across the Global South, affordable, reliable energy is even more essential to jobs, economic growth, and rising living standards than in developed countries,” he added.
“The transition must respect those ambitions as energy poverty is a formidable barrier to growth,” he continued.
“And let me be clear: this region remains critical to global energy security and prosperity,” he went on to state.
Nasser highlighted in his speech that around half the world’s proven oil reserves are located in the Middle East, together with more than 90 percent of its spare production capacity.
“Markets can diversify suppliers [but] … they cannot diversify geology,” Nasser warned.
“So, when energy infrastructure in this region is targeted, the consequences reach economies everywhere,” he said.
“The Kingdom has invested deeply in protecting these supplies. But no nation, even one as capable and confident as ours, can safeguard them alone,” he added.
“Protecting the infrastructure and routes on which the world depends requires collective international efforts,” he continued.
“Our responsibility is to help strengthen that foundation as the Kingdom’s and the world’s energy needs evolve. That means an integrated energy system of oil, gas, and renewables that is productive in normal conditions, flexible and resilient under pressure,” he went on to state.
Another Level
In a speech made at the Energy Intelligence Forum in London, UK, earlier this month, Nasser stated that this year has been “another level”.
“The world always knew that the Strait of Hormuz could be disrupted,” he noted.
“Few expected the near closure of the world’s most critical energy artery to last so long, or its impact to spread so widely,” he added.
“It has caused the most serious energy supply shock in my career. It has exposed how deeply energy security, economic security, and geopolitical events are connected,” he continued.
“And while it is too early to say what the full impact will be, we have clearly entered new and far from normal times,” he warned.
In this speech, Nasser described oil and gas as the “lifeblood of modern civilization” and said their reach extends from “the fertilizers that help feed us and medicines that heal us, to the clothes we wear, the materials that build our cities, and the phones that connect us”.
Nasser highlighted that renewable energy “will play an important role when produced competitively” but said oil and gas “are so deeply embedded in the global economy that the gears are grinding far beyond energy markets”.
He pointed out that ocean freight has been “hit hard”, supply chains are “tight”, and that “people worry about inflation and the availability of essentials”.
“And with shortages of aluminum, sulfur, helium, and petrochemicals, solar, wind, and EVs are not immune either,” he warned, noting that “everything is connected”.
Global Oil Stocks
In this speech, Nasser revealed that the world entered the “crisis” with almost 10 billion barrels of global oil stocks, “all told”.
He pointed out that, since then, nearly three billion barrels of gross oil supply has been “lost”, or “roughly half the crude and products that would normally have moved through Hormuz over the same period”.
Nasser conceded that this has been mitigated by more than one billion barrels from those stocks but said most of that came from onshore commercial inventories, “which was the last major tool in the box”.
“And estimates suggest less than six billion barrels of commercial inventories remain today, with the vast majority not practically available,” he said.
“So, the system is already straining. And, with precious little else the world can turn to, the supply resilience cushion is scarily thin,” he warned.
Resilience
Nasser noted in his speech that, at Aramco, resilience is “like a vast, complex jigsaw puzzle, not a single asset or capability”.
“Our strategic storage globally has proved vital,” he revealed.
“Our spare capacity, multiple crude oil grades, domestic gas storage, tanker fleet via Bahri, and one of the strongest balance sheets in the industry add further layers,” he added.
“So does our local supply chain, which has provided more than 90 percent of the materials used in asset restoration,” he continued.
Nasser revealed in the speech that resilience is core to Aramco’s design philosophy, “guided by ‘Aramco Standards’, which in many areas go beyond industry requirements”.
“This means separating our critical facilities; building in backup equipment; planning for maintenance; emergency command and firefighting excellence; rapid damage assessment; and restoring damaged infrastructure at pace,” he noted.
Nasser went on to highlight that Aramco’s resilience was not built overnight.
“It was there when we needed it because previous generations had the foresight to build, maintain, and strengthen it,” he said.
“Now it is our generation’s turn to make the choices that future generations may one day depend on. And we have no time to lose,” he warned.
In a video posted on Aramco’s X page, which showed Aramco Executive Vice President of Strategy and Corporate Development Ashraf Al Ghazzawi speaking at the Energy Intelligence Forum, Al Ghazzawi said Aramco’s philosophy “has always been resilience by design”.
“You start by the way we design our facilities and assets, how we decide on how many spares do we need, the space in between assets, the redundancies that we build and that goes sometimes above and beyond what industry standards call… for,” he said.
“Then you go to the way we design our global storage. That proves to be the ultimate shock absorber at the beginning of the conflict,” he added.
Al Ghazzawi also touted “multiple pipeline routes” and “one of the most highly trained, highly skilled workforce[s] in the business” in the video.
To contact the author, email
