The world's oil reserves reached the dangerous limit; Saudi Arabia warns of a bigger crisis

Source link: The world's oil reserves have reached the dangerous limit; Saudi Arabia's warning about a bigger crisis at a glance The International Energy Agency (IEA) plans to release another 100 million barrels of oil and fuel products from emergency reserves; But at the same time as the Strait of Hormuz crisis continues, global oil reserves are rapidly decreasing. US strategic oil reserves reached 331.2 million barrels, which is the lowest level since 1983. […] Source site: Sefir Arjan

The International Energy Agency (IEA) plans to release another 100 million barrels of oil and fuel products from emergency reserves; But at the same time as the Strait of Hormuz crisis continues, global oil reserves are rapidly decreasing.

US strategic oil reserves reached 331.2 million barrels, which is the lowest level since 1983. This amount is close to the estimated operational minimum, that is, 250 to 300 million barrels.

Saudi Aramco warns that the margin of confidence in global oil supply has narrowed. Even after the Strait of Hormuz reopens, it may take two years for oil reserves to recover; A situation that makes the market vulnerable to new shocks.

Earlier this week, the International Energy Agency announced after consultation with the Group of Seven that it would release another 100 million barrels of diesel, gasoline and crude oil from emergency reserves. This action is part of the plan that was announced in March to release 400 million barrels of oil in response to the restrictions created in the Strait of Hormuz. However, these liberalizations face a fundamental problem: the world's oil reserves are rapidly depleting.

When the US government started releasing oil from the country's strategic reserves, several reports were published in which experts warned about the low level of reserves and emphasized that taking more of these reserves could be dangerous.

At the beginning of October, the amount of oil in the strategic reserves (SPR) of the United States reached 331.2 million barrels after the last stage of release of more than 9 million barrels of oil; The lowest level since 1983. These releases are part of the US commitment to supply 172 million barrels of oil this year.

The problem is that the US reserves of 331.2 million barrels are not far from the minimum operational level required for this storage system; The level that experts estimate is between 250 and 300 million barrels.

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Depleting reserves near this range is dangerous, as it can disrupt the performance of storage infrastructure. To avoid such a situation, reserves must be replenished; At the same time, countries must maintain their ability to deal with possible future crises in oil supply.

However, strategic oil reserves are not the only reserves approaching the minimum operating range. Global oil reserves are also in a downward trend.

According to the International Energy Agency's latest monthly oil report for September, global oil reserves fell by 95 million barrels in August. As a result, the total withdrawal from reserves has reached 507 million barrels since February. equivalent to 2.8 million barrels per day.

The only promising point in this report was that the commercial reserves of the member countries of the Organization for Economic Cooperation and Development (OECD) increased by 23 million barrels; An increase that compensated for the decrease of 19 million barrels of strategic reserves.

But this good news did not last long.

Earlier this week, Aramco CEO Amin Nasser warned that the world's oil reserves have fallen to alarming levels and that their restoration will probably not be possible in the near future.

"The oil supply system is already under pressure," Nasser said at the Energy Intelligence Forum in London. In a situation where the world does not have many alternatives, the margin of confidence of supply is extremely small and worrisome.

He noted that it could take up to two years to restore the depleted reserves; That too on the condition that the Strait of Hormuz is reopened.

As long as this does not happen, the world will continue to draw from its reserves. This makes markets more vulnerable to more severe supply shocks if the war continues into 2027.

Fatih Birol, the head of the International Energy Agency, also announced this week after meeting with the members of the agency to review the new release of oil and fuel: the member states of the International Energy Agency still have significant reserves of emergency oil under public ownership; A volume equivalent to about 1.1 billion barrels, of which more than 200 million barrels are diesel. The agency is ready to release more quantities of these stocks into the market as and when needed.

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The purpose of these statements was to reassure the market and reduce concerns about fuel shortages, especially diesel. However, this message may exacerbate concerns rather than calm the market; Because global reserves are also close to their minimum operating range.

Exceeding this limit could disrupt the performance of the entire storage system and jeopardize the world's ability to maintain and use emergency reserves.

Since the start of the war between America, Israel and Iran, more than one billion barrels of crude oil have been taken from the world reserves. According to Nasser, CEO of Aramco, most of these withdrawals were made from commercial reserves.

As a result, less than 6 billion barrels of oil remain in storage tanks; Stocks that must be kept as high as possible to maintain the functionality of the global storage system.

It seems that the world has consumed most of its margin of confidence against oil supply disruptions.

In such a situation, it is not surprising that many countries, especially in Asia, are now competing with each other to increase their oil reserves.

Due to the dependence of a large part of its oil imports on the Middle East, Asia is highly vulnerable to negative developments in this region. Disruption in the supply of oil from this region has faced Asian economies, especially Southeast Asian countries, with serious difficulties in providing fuel for their economy and population. These countries also try to keep fuel prices at a relatively affordable level.

According to Reuters, the governments of nine Southeast Asian countries announced in a statement released this week: "The most advanced measures under consideration include supporting the development of oil storage systems in each country and the establishment of joint regional reserves on a voluntary basis."

In other words, these countries plan to take measures similar to the International Energy Agency so that they can deal with supply disruptions in future crises better than in the past.

But one fundamental issue still remains: the oil that these countries intend to store must come from somewhere and its cost must not be too high.

Rebuilding oil reserves will take time, and until prices return to more sustainable levels, the process will be costly for Southeast Asian governments and other countries looking to refill their reservoirs.

As a result, even if the Strait of Hormuz crisis ends, the return of the oil market to normal conditions will not necessarily be quick. A sharp decline in global inventories means the market may remain vulnerable to new supply disruptions for a long time.