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Aramco CEO Predicts Tighter Oil Market and Potential Tanker Shortage

OIL

Global oil markets are able to cope with Red Sea disruptions in the short term, but prolonged attacks could lead to tanker shortages in an already tightening oil market, Aramco CEO, Amin Nasser, told Reuters.

  • "If it's in the short term, tankers might be available ... But if it's longer term, it might be a problem. There will be a need for more tankers, and they are going to have to take a longer journey", Nasser said.
  • Aramco can bypass the Bab al-Mandab strait near Yemen via the East-West pipeline, giving it quicker access to the Suez Canal, while some oil products might have to sail around Africa, Nasser added.
  • Global oil stocks are close to the low end of the five-year average after a drawdown of 400mn barrels in the past two years, leaving OPEC’s spare capacity as the main source of additional supply to meet rising demand, he added.
  • "The only card available today is the spare capacity, which is around 3.5% globally. And as demand picks up, you will erode that spare capacity unless there is additional supply."
  • Nasser expects oil demand to grow by 1.5mbpd to 104mbpd in 2024, after growing 2.6mbpd in 2023. There is good growth and demand is very healthy in China," he said.
  • Growing oil demand and lower stocks will help tighten the market further, he added.
Energy BulletsCommodities
Energy BulletsCommodities

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