Oil stocks, which protect the global economy from supply shocks, have fallen to "alarmingly low" levels, which exposes markets to the risk of further deterioration if the Strait of Hormuz is not reopened. This was warned by the head of Saudi Arabia's state oil company, quoted by "Bloomberg".
He made his statement just days after the governments of the world's largest economies announced plans to release up to 100 million barrels of oil and diesel from their emergency stocks to ease rising fuel prices.
"Until Hormuz is fully reopened and confidence is restored, the harsh reality is that pressure at both ends of the barrel will increase," said Saudi Aramco Chief Executive Amin Nasser at a forum in London. "While the pressure on crude oil is severe, refined fuel prices have risen even more sharply".
Releasing stocks will buy economies some time but will not solve the imbalance between supply and demand, Nasser said. Even after the vital shipping "bottleneck" at Hormuz reopens, it could take up to two years for energy-consuming countries to rebuild their stocks, he said.
Gulf producers have been working to increase production and exports and have managed to raise crude oil flows to levels close to pre-war levels. Saudi Arabia and neighboring countries such as the United Arab Emirates and Kuwait use their own tankers to transport oil through the Strait of Hormuz. It has been at least partially blocked since the United States and Israel attacked Iran in late February, triggering a regional war.
The increased supplies have provided little relief to oil markets that continue to weigh on supply security risks in the Persian Gulf and Red Sea. Brent crude, the international benchmark, has been trading around $100 a barrel for the past month, despite more tankers passing through the Strait of Hormuz.
Saudi Arabia has been a key contributor to the increase, as Aramco has increased crude shipments from its main export terminal at Ras Tanura in the Persian Gulf over the past month. The company responded quickly to the temporary shutdown of its main oil pipeline connecting the east and west of the country after an attack last month.
Since then, the company has restored flows on the "East-West" oil pipeline to about 80% of its capacity," meaning it also has more oil to transport from the Red Sea.
Source: news.bg