The international oil market may now see Brent fall below the psychological threshold of $100 again, but behind the daily price fluctuation there is a much bigger problem: Global crude and finished fuel stocks have fallen dramatically and cannot be restored quickly. Saudi Aramco's chairman and CEO, Amin Nasser, warned that even after the flows through the critical sea routes are fully restored, replenishing stocks, at the same time as meeting global demand, could take up to two years. The statement was made on October 5 at the Energy Intelligence Forum in London and was republished today, October 6, by the official Saudi news agency.
Less than 6 billion barrels left
The figures presented by the head of the world's largest oil company are impressive. According to Aramco, before the crisis there were a total of almost 10 billion. barrels of global oil reserves. Since its inception, gross supply of almost 3 billion barrels has been lost, while more than 1 billion barrels have already been used from inventories to limit the shortage in the market. Aramco estimates that today there are less than 6 billion barrels left of commercial stocks and that a large part of them is practically not available for immediate use.
The problem is even bigger in ready-made fuel. The CEO of Kuwait Petroleum Corporation estimated that the global market lacks production of about 6 million barrels. per day in refined products such as diesel, gasoline and jet fuel, as there is not enough refining capacity available outside the Middle East to fill the gap. This explains an apparent paradox: Even when crude is falling, gasoline and especially diesel prices do not necessarily follow at the same speed.
Today, Tuesday, October 6, Brent moved to around $98.6 per barrel, having closed on Monday at $100.32. The de-escalation came as crude exports from the Middle East increased again and the new G7 intervention was announced. However, maritime transport data show that while crude and condensate exports from the Gulf have recovered to about 91% of pre-crisis levels, refined fuel exports remain much lower, close to 60%. This is particularly important for the European diesel market.
G7 reopens emergency reserves
The seriousness of the situation is also shown by the decision of the G7 countries to proceed with a new coordinated release of 100 million barrels of diesel and crude oil from emergency reserves, through the International Energy Agency. The process has already begun and is expected to develop over a period of four months, with significant quantities of diesel being released within the first 20 days.
This is essentially another "cushion" so that there are no shortages and an even greater explosion of prices in the winter. However, it is not a permanent solution. As early as March, the largest emergency release in history, amounting to 400 million barrels had been agreed, of which about two-thirds have been used. And herein lies the essence of Aramco's warning: every barrel that comes out of a strategic or commercial reserve today will have to return to it at some point, at a time when the global economy still needs huge amounts of oil every day.
