Aramco CEO sees hazards in the Red Sea and anticipates tighter oil markets

 

Gapteks.com, DAVOS: Short-term interruptions to the Red Sea would not affect the world's oil markets; however, if the Houthis continue their attacks on ships, longer journeys and a delay in supplies may result in a scarcity of tankers, according to the CEO of Saudi oil giant Aramco, who spoke to Reuters.

Amin Nasser stated he anticipated a tightening of the oil market following the 400 million barrels that consumers had consumed in the previous two years, leaving the Organization of the Petroleum Exporting Countries' excess capacity as the primary source of new supply to satisfy the increasing demand.

Numerous businesses have been compelled to reroute their goods throughout Africa as a result of Houthi attacks on ships in the Red Sea. The Houthis, who support Iran, claim that they are supporting the Palestinian people in Israel's continuing conflict with Gaza.

If it's going to happen soon, tankers may be available. In an interview conducted this week in Davos, Switzerland, on the fringes of the World Economic Forum, Nasser stated that "if it's longer term, it might be a problem." "Will more tankers be required, and will their journeys need to be longer?"

Around 12 percent of all transportation in the world flows via the Suez Canal, which is the quickest route from Asia to Europe, and where container boats have been stopping or diverting from the Red Sea.

The voyage takes an extra 10–14 days if you take the other route around the Cape of Good Hope in South Africa.

According to Nasser, Aramco may have faster access to the Suez Canal by avoiding the Bab Al-Mandab strait in Yemen, from where the Houthis start their attacks. This pipeline connects the company's eastern oil facilities with its western shore.

As a consequence of peace discussions between Saudi Arabia and Yemen, Nasser stated that certain oil products could need to be shipped over Africa and that he does not anticipate the Houthis attacking Aramco's facilities once more.

Reserve Capacity 

Nasser projected that oil consumption would reach 104 million barrels per day in 2024, an increase of almost 1.5 million barrels per day following a 2.6 million barrels per day spike in 2023.

He continued, "Low stocks and growing demand will help tighten the market even more."

According to Nasser, during the last two years, consumers have reduced both inland and offshore reserves by 400 million barrels, sending global supplies to the lower end of a five-year average.

Right now, there is just the spare capacity card, which accounts for around 3.5 percent of all cards worldwide. Additionally, unless there is an increase in supply, you will deplete that spare capacity as demand rises.

Nasser stated that he was unable to forecast the peak or plateau of oil demand since the usage of fossil fuels was shifting from the industrialized nations to emerging nations.

He declared, "Demand is very healthy and there is good growth in China."

Focusing on turning liquids into chemicals, Aramco has made investments in Chinese refineries with agreements connected to the supply of crude oil and is currently negotiating for additional.

Refineries that are completely integrated are rare in the world. China presents that chance, and the country's market appeal stems from the anticipated growth in chemical demand, according to Nasser.

Source: arabnews.com