The world has 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, the CEO of Abu Dhabi’s state-owned oil company ADNOC said.
Diesel stockpiles in some areas are at 35-year lows for this time of the season, while others face an LNG supply gap of 600 billion cubic feet, Sultan Al Jaber added on Monday at the UAE’s ADIPEC conference.
Prices of diesel in many markets have surged to record highs, boosted by wartime supply disruptions and pose inflation and cost-of-living threats to governments and consumers.
“We need expanded strategic storage, larger stockpiles of products, and flexible refining capacity closer to consumer markets,” Al Jaber said. “Infrastructure must be built before it is needed and enabled by advanced logistics.”
The cost of shipping and logistics has risen to 30% of the cost of a barrel, from 5% before the Iran war, Al Jaber said.
The international benchmark Brent LCOc1 is trading around US$110 a barrel, up about 50% from February just before the war began.
Last month, the International Energy Agency agreed to release more than 20 million barrels of diesel to the market and any oil remaining from a record emergency reserves release pledged in March to boost supply and cool soaring prices.
Amin Nasser, CEO of Saudi Arabia’s state oil company Saudi Aramco said last month that fewer than 6 billion barrels of commercial inventories remained, with the vast majority not practically available.
