Aramco CEO predicts tighter oil market as consumer stocks deplete

Amin Nasser, CEO of Saudi Aramco

Saudi Arabian Oil Co.’s (Saudi Aramco) President and CEO Amin Nasser expects the global oil market to witness a shortage in supply after consumer stockpiles depleted by 400 million barrels in the past two years, Reuters reported.

This left OPEC’s spare production capacity as the main source of additional supplies to meet the growing demand.

He said that global oil markets can cope with Red Sea disruptions in the short run, although prolonged attacks by the Houthis on ships would lead to a shortage of tankers due to longer voyages and a supply delay.

Saudi Aramco can bypass the Bab al-Mandab strait near Yemen through a pipeline linking its eastern oil facilities with its western coast and allowing it faster access to the Suez Canal, the executive added.

Some oil products might have to sail around Africa, Nasser pointed out, adding that he does not expect the Houthis to attack Aramco's facilities again due to the peace talks between Saudi Arabia and Yemen.

Nasser expects oil demand to reach 104 million barrels per day (bpd) in 2024, meaning growth of nearly 1.5 million bpd, after rising by roughly 2.6 million bpd in 2023. Higher demand, combined with low stocks, will help to further tighten the market further, he elaborated.

The only solution to overcome low stocks and high demand is spare capacity, which amounts to 3.5% globally, the executive said highlighting that with high demand. However, these reserves will decline unless there are additional supply.

Nasser could not predict when oil demand would peak or plateau as fossil fuel consumption was migrating from developed to developing countries, which were getting richer. He further added that there is good growth and demand in China.

There are not many refineries around the world that are fully integrated, Nasser pointed out, adding that China offers that opportunity and demand for chemicals is expected to grow, so it is regarded as an attractive market.