Emergency oil stocks may only buy the world a winter

This piece reports and analyses public remarks by Saudi Aramco chief executive Amin Nasser. The views quoted are theirs, not FinPrism’s, and nothing here is investment advice.

What he said

Amin Nasser runs Saudi Aramco, the world’s largest oil company, and when he talks about supply, traders take notes. At the Energy Intelligence Forum in London on Monday he set out a stark arithmetic. Since the war with Iran began in February, he said, the world has lost nearly 3 billion barrels of gross oil supply, about half of what would normally have passed through the Strait of Hormuz. The world entered the crisis with almost 10 billion barrels in storage, and more than 1 billion have been drawn down since. Most of what remains, he argued, is not realistically available.

His summary was blunt: “The system is already straining.” Government stockpiles, he said, “might buy us a winter,” but they “cannot fix long-term supply.” He also claimed Brent could have reached $200 a barrel without Saudi Arabia’s East-West pipeline, which carries crude to the Red Sea and around the blocked strait.

Why it matters

Nasser’s warning lands at a delicate moment. Middle East exports have recovered close to pre-war levels, and the G7 has just agreed to release up to 100 million barrels of emergency oil and diesel over four months, on top of about 325 million barrels already released by members of the International Energy Agency. Those headlines suggest the worst is over. Nasser’s point is that this recovery is being paid for by emptying the world’s spare tanks.

That matters for prices in two ways. First, thin stocks leave little protection against the next shock, such as another tanker attack or a pipeline outage, so price spikes could be sharper. Second, once the strait fully reopens, the world must refill those tanks while also meeting normal demand. Nasser said that could take up to two years. Restocking is extra demand, and it would arrive just as traders might otherwise expect prices to fall.

What it could mean for markets

Others see a similar picture for refined fuels. Goldman Sachs expects Brent to settle near $80 as flows normalise, but forecasts diesel and jet-fuel margins above $40 a barrel in 2027, roughly double their usual level, because refineries are already stretched. Its analyst Nikhil Bhandari argues prices must stay high enough to keep some demand in check. CLSA’s Baden Moore made a related point: emergency releases solve a short-term shortage, not the underlying stock problem.

Put together, the message for investors is that crude prices may ease while fuel prices stay stubbornly high. That would favour refiners and hurt fuel-hungry businesses such as airlines and trucking firms, and it would keep energy a live risk for inflation and interest rates in the year ahead.

The other side

Nasser is not a neutral observer. Aramco earns more when oil is expensive, and a producer has every reason to stress scarcity and argue for more investment in supply. Markets have also proved resilient: European gasoil futures fell almost 6% when the G7 release was announced, and Brent at just under $100 is well below the extremes some feared. Higher prices themselves curb demand, and Aramco says it can bring its full 12 million barrels a day of capacity online within days, which would ease the squeeze faster than his timeline implies.

What to watch

Weekly inventory data in the US and Europe, the pace of the G7 release, and whether diesel margins stay wide as crude falls. If stocks keep shrinking even while exports recover, Nasser’s warning will look prescient. If they stabilise, it will look like a seller talking up his market.