Aramco says US, Iran war has cost the global market 2.6 billion barrels of oil

DUBAI: The world has lost more than 2.6 billion barrels of oil since the U.S.-Israeli war with Iran began in February, the head of Saudi oil giant Aramco said, warning global inventories were running low despite measures to reroute flows.

The lost supply is equivalent to nearly a month of normal global crude production, underscoring the scale of a disruption that has closed major oil chokepoint the Strait of Hormuz, upending energy markets, and shows little sign of easing.

“If the Strait were to open today, it would take up to 18 months at an average rate of 2.1 million barrels a day to replenish depleted inventories,” Aramco CEO Amin Nasser said on Tuesday.

Aramco, the world’s top oil exporter, posted a 44% increase in net profit of $32.69 billion in the three months to June 30 as it reaped higher prices for crude oil, refined products and chemicals, while rerouting shipments away from Hormuz.

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“Despite the unprecedented supply disruption through the Strait of Hormuz, we continued to demonstrate our ability to maintain business continuity by capitalizing on our diverse asset base and multi-decade planning,” Nasser said.

Gulf conflict expanding into red sea

The supply disruption could widen after Houthi forces announced a blockade of Saudi Arabia’s oil industry last month, adding pressure to Red Sea shipping and broadening the fallout from the conflict.

The blockade threatens both the East-West Pipeline route from eastern Saudi Arabia to the Red Sea port of Yanbu — a key alternative to Hormuz — and Saudi export terminals on the Red Sea.

Yemen’s Houthis also targeted Saudi oil installations at two Red Sea ports last month as the Gulf conflict expanded to a second front.

Nasser said recent attacks on facilities had caused some production interruptions, but said he was confident Aramco could restore operations quickly. The targeting of the facilities had no material impact operationally or financially, he added.

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He said Aramco’s storage capacity, its export terminals, and its ability to ramp up exports through the East-West Pipeline, a route he has previously described as a critical lifeline, were key to this.

He said releases from strategic reserves and commercial inventories, along with demand rationing and the East-West Pipeline, had helped cushion the global shock.

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Nasser said the disruption had exposed vulnerabilities in the global refining system, with strong refining margins pointing to continued tightness in product markets while refineries worldwide operated near maximum utilisation rates.

He warned the industry had few buffers to absorb further disruptions, and that any major unplanned or prolonged refinery outage could add further pressure to global energy supplies.

Asked how quickly production could be ramped up once disruptions ease, Nasser said output could return to pre-conflict levels within days and reach Aramco’s maximum sustained capacity of 12 million barrels per day within three weeks if requested.

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The company’s total hydrocarbon production averaged 9.5 million barrels per day in the second quarter, compared to 12.8 million in the same period a year earlier, the company said.

Looking forward, “we remain concerned that the continued disruption via the Strait of Hormuz and the threat to shipping through the Bab el-Mandeb Strait (from the Red Sea) could have a significant long-term impact on the world economy,” Nasser said on a call with analysts after the results.