Nasser says rebuilding oil stocks could take two years after the Hormuz losses

Amin Nasser, president and chief executive of Saudi Aramco, told the Energy Intelligence Forum in London on Monday that rebuilding global oil inventories, while still meeting demand, could take up to two years even after the Strait of Hormuz reopens and confidence returns. He said the world entered the crisis with almost 10 billion barrels of oil stocks of all kinds. Since then, nearly 3 billion barrels of gross supply had been lost, roughly half the crude and products that would normally have moved through Hormuz in the same period.

More than 1 billion barrels had been drawn from stocks to cover the gap, he said, mostly from onshore commercial inventories, which he called the last major tool in the box. Estimates now put commercial inventories under 6 billion barrels, with the vast majority not practically available. He described the remaining cushion as thin. Emergency releases, he said, can ease a short stretch. They cannot repair long-term supply.

The Group of Seven agreed on Friday to a coordinated release, through the International Energy Agency, of 100 million barrels over four months, with diesel front-loaded in the first 20 days. The IEA has said about 325 million of the 400 million barrels pledged under its March collective action have already been released. Nasser's two-year figure sits next to those releases, not instead of them. A 100 million barrel draw over four months is a twentieth of the 2 billion barrel gap between his 3 billion lost and his 1 billion already taken from stocks, if both of his numbers are taken at face value.

Brent crude closed New York trading on Monday at 100.32 dollars a barrel, after signs of a recent rise in exports. The price move and the inventory speech point in different directions. Traders marked a near-term flow. Nasser marked the stock that has already been used and the time required to put it back while demand continues.

He did not give a Saudi production figure or a spare-capacity number in the published remarks. He said half the world's proven reserves are in the Middle East, along with most of its spare capacity, and that multiple export routes already reduce the risk that one chokepoint stops the system. Aramco, he said, is studying additional routes for crude exports and more overseas storage to cover short disruptions. Those are projects, not barrels on the water this week.

The arithmetic he offered is the part other coverage has tended to round off. Start with 10 billion barrels of stocks. Subtract a gross loss of 3 billion that never moved through Hormuz. Add back more than 1 billion taken out of storage. The commercial slice left is under 6 billion, and he says most of that cannot be used in practice. The usable remainder is the quantity he did not put a single number on. That is the open cell in the account. If "the vast majority" means three quarters, the practical cushion is about 1.5 billion barrels. If it means nine tenths, the cushion is about 600 million. He did not choose.

The two-year rebuild is conditional. It starts when Hormuz is fully open and buyers trust the route again. It also assumes demand is met at the same time, so refill is not a matter of shutting consumption. A war that keeps even a partial closure in place pushes that clock out. A deal that restores the route starts it. Neither outcome was announced in London.

What Monday's speech fixes is a company estimate, from the producer with the most at stake in a reopened Gulf, of how deep the stock draw has gone and how long a refill takes. It is not a forecast of the Brent price. The 100.32 dollar close is a separate fact, recorded the same day, in a market that can rally on a cargo and still be short of inventory.