The global oil market is entering the winter with a much thinner safety cushion after more than 1 billion barrels were taken out of commercial stockpiles during this year’s supply disruptions, industry executives said at a London energy conference.The concern is not simply how much oil is sitting in storage, but how much of it can actually reach the market. Saudi Aramco CEO Amin Nasser said less than 6 billion barrels of commercial inventories remain globally, with only 10% or less considered practically available.“Less than 6 billion barrels of commercial inventories remain today, with the vast majority not practically available, so the system is already straining,” Nasser said at the Energy Intelligence Forum, as quoted by Reuters.Oil can be counted as inventory without being immediately usable. Some crude is effectively tied up in pipelines or tank bottoms, while governments keep emergency reserves that cannot routinely be tapped. This leaves a much smaller pool of barrels that traders can access when supply suddenly falls.That is becoming a bigger concern as global oil consumption is running at about 102 million barrels a day, according to the International Energy Agency. With fewer readily available barrels in storage, another major disruption could have a larger impact on prices.
Why inventories have been drained
Governments and energy companies have been relying on stored oil to compensate for supply disruptions linked to the wars in the Middle East and Ukraine. More than 1 billion barrels have been released, mainly from commercial inventories, since the latest Middle East crisis began, Nasser said.The drawdown has effectively used up much of the buffer that normally helps the market absorb temporary supply shocks. Rebuilding those stocks could take years because producers would have to add oil to storage while continuing to meet everyday global demand.Chevron CEO Mike Wirth said the loss of these buffers had made the oil market more fragile and increased the price floor for crude.The reduced cushion also leaves the market increasingly dependent on supplies that are still flowing, particularly seaborne exports from the Middle East. Vitol CEO Russell Hardy said there were few additional inventories left in Western markets that could be drained to make up for a fresh shortfall.The US is also entering the period with a much smaller emergency crude cushion. Stocks in the country’s Strategic Petroleum Reserve have fallen to their lowest level since October 1982, according to Department of Energy data.The reserve is designed to provide additional crude during major supply disruptions, meaning its depleted
IEA plans 100 million-barrel release
The IEA is preparing to release 100 million barrels of crude and diesel as it seeks to ease pressure in the market, particularly on diesel prices.Nasser said the decision followed negotiations over how much oil could realistically be made available. It is not yet clear how much of the planned release will consist of barrels from the IEA’s record 400 million-barrel release in March that had not yet reached the market.The fresh release highlights the limited availability of emergency supplies. “Inventories are reaching a stress level. Only 10% or less is available,” Nasser said.The intervention could provide some near-term relief, but executives at the London forum warned that replenishing depleted inventories would remain a challenge.
