World's Biggest Oil Giant Warns Global Stockpiles Are 'Scarily Thin' and Could Take Two Years to Rebuild

Global oil stockpiles have become 'scarily thin' after the Middle East conflict disrupted nearly 3B barrels of regional oil supply, while rebuilding depleted inventories could take up to two years, Saudi Aramco chief executive Amin Nasser warned Monday.

Speaking at the Energy Intelligence Forum in London, Nasser said pressure on oil markets could intensify until the Strait of Hormuz fully reopens and confidence returns. 'Until Hormuz fully reopens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify,' Nasser said. 'Even then, replenishing inventories while meeting demand could take up to two years.'

Nearly 3B Barrels Lost

Nasser said the seven-month conflict had reduced oil supply from the region by nearly 3B barrels since it began in February, while more than 1B barrels had been drawn from various reserves to cushion the supply shortfall. Most of the oil drawn down so far has come from company-held inventories rather than government strategic reserves. Less than 6B barrels of commercial inventories remain, Nasser said, with most of that volume 'not practically available'.

'The system is already straining,' he said, describing commercial inventories as the 'last major tool' available to the market. The depleted inventories leave the market with less of a cushion against further supply disruptions, according to Nasser's assessment.

G7 Moves to Release Emergency Supplies

The warning comes after G7 nations agreed to release 100M barrels of crude oil and fuel stocks in coordination with the International Energy Agency. The G7 comprises the US, UK, Canada, France, Germany, Italy, and Japan.

The move is intended to ease pressure on fuel markets as governments respond to surging energy prices. Nasser said the emergency releases could provide temporary relief but would not resolve the underlying supply-demand imbalance.

Hormuz Remains Critical

The Strait of Hormuz remains central to the crisis because of its importance to global energy shipments. The conflict has severely disrupted traffic through the narrow waterway, which handles roughly one-fifth of global petroleum liquids consumption and more than one-fifth of global LNG trade, raising concerns about energy supplies and prices.

Disruptions have forced Gulf producers to adjust their export strategies as they work to maintain crude flows. Saudi Arabia, the United Arab Emirates, and Kuwait have used their own tankers to transport crude through the Strait. Saudi Arabia has also used its East-West pipeline to move crude towards the Red Sea.

Aramco has also increased shipments from its Ras Tanura export terminal and restored East-West pipeline flows to about 80% of capacity after the pipeline was temporarily halted following an attack last month. Nasser said the company is exploring alternative export routes and additional overseas storage to reduce its reliance on individual supply corridors.

Fuel Markets Face Longer Pressure

Crude flows have recovered to near pre-war levels, but markets remain sensitive to risks surrounding the Gulf and Red Sea. Nasser said the strain is particularly severe in refined products, where prices have risen faster than crude. 'While the squeeze on crude is serious, refined fuel prices have risen even more sharply,' he said.

Nasser's comments suggest that market pressure could persist even after shipping conditions improve. Producers will need to meet ongoing demand while also replenishing depleted inventories.