World's energy supply buffers have been eroded, ADNOC CEO says
USO•ADNOC CEO Sultan Al Jaber said nearly 1 billion barrels have been drawn from global oil inventories since shipping through the Strait of Hormuz was disrupted. He said diesel stockpiles in some areas are at 35-year lows and shipping and logistics now account for 30% of a barrel's cost, up from 5% before the Iran war.
1. Inventories and supply gaps
Sultan Al Jaber, CEO of Abu Dhabi's state-owned oil company ADNOC, said the world had eroded its supply buffers by draining nearly 1 billion oil barrels from global inventories since the US-Israeli war on Iran disrupted shipping through the Strait of Hormuz. He added that diesel stockpiles in some areas are at 35-year lows for this time of year, while others face an LNG supply gap of 600 billion cubic feet.
2. Costs and stockpiles
Al Jaber said shipping and logistics costs had risen to 30% of the cost of a barrel, from 5% before the Iran war. He called for expanded strategic storage, larger product stockpiles and flexible refining capacity closer to consumer markets.
3. Emergency oil releases
Brent was trading around $110 a barrel, up about 50% from February, before the war began. Last month, the International Energy Agency agreed to release more than 20 million barrels of diesel and any oil remaining from an emergency reserves release pledged in March. Saudi Aramco CEO Amin Nasser said last month that fewer than 6 billion barrels of commercial inventories remained, with the vast majority not practically available.
