Energy

World’s Running Out Of Cushion To Blunt Iran War’s Oil Shock, Top Execs Say

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The global oil market is burning through its remaining supply cushion as wars in the Middle East and Ukraine drain inventories and leave energy prices increasingly vulnerable.

Less than 6 billion barrels remain in commercial inventories worldwide, but only a fraction of those supplies are readily available to the market, Saudi Aramco CEO Amin Nasser said Tuesday at the Energy Intelligence Forum in London, noting that the “system is already straining.”

Governments and energy companies have tapped stored supplies as conflict disrupted global oil flows and sent fuel prices higher. More than 1 billion barrels have been released since the Iran war began this year, Nasser said.

Saudi Arabia itself faced a potentially severe supply crunch in September after an attack knocked out its East-West Pipeline, a major route used to bypass the Strait of Hormuz. The kingdom restarted the pipeline at reduced rates roughly a week later, and flows have since climbed to 5.8 million barrels per day as the country works to maintain exports despite continued disruptions in the strait. 

The International Energy Agency (IEA) is now preparing another 100 million-barrel release of crude oil and diesel in an effort to ease pressure on fuel markets, Reuters reported. The move follows a record 400 million-barrel emergency release coordinated earlier this year, more than 80% of which has already reached the market.

“It took a lot of negotiations, but it is 100 million,” Nasser said. “Inventories are reaching a stress level. Only 10% or less is available, that’s why they struggle with 100 million barrels.”

Disruptions to oil and refined-fuel supplies from the Iran war have helped push fuel costs sharply higher, adding pressure to already strained global energy markets. U.S. diesel prices surged past $6 per gallon in September, providing the backdrop for the latest emergency release.

Diesel prices have eased from their September peak but remain historically elevated. The national average stood at $6.32 per gallon Tuesday, down from a record $6.53 on Sept. 22 but nearly $2.64 higher than a year ago, AAA data show. The sustained price pressure has prompted the Trump administration to open tax-free dyed diesel to highway trucks as officials seek to lower transportation costs amid the global fuel crunch.

The world consumes roughly 102 million barrels of oil per day, according to the IEA, meaning the planned emergency release is roughly equivalent to a single day of global consumption.

Middle Eastern crude exports have rebounded sharply despite continued attacks on tankers and disruptions around the Strait of Hormuz. Shipments rose above prewar levels on 14 days in September, with the seven-day moving average reaching 18.3 million barrels per day by Sept. 30, compared with roughly 18 million barrels per day before the war, according to ship-tracking data reported by Reuters. The recovery has been driven largely by Saudi Arabia, with crude moving through Hormuz as well as alternative routes through the Red Sea.

Chevron CEO Mike Wirth similarly warned that the disappearance of the market’s traditional buffers has made oil more vulnerable to supply shocks and raised the floor beneath crude prices. Industry executives cautioned that rebuilding depleted inventories while simultaneously satisfying global demand could take years.

Chevron and Aramco did not immediately respond to the Daily Caller News Foundation’s request for comment.

The shrinking cushion could become particularly important this winter. Vitol CEO Russell Hardy said the world is increasingly dependent on seaborne oil supplies escaping the Middle East “to keep things in balance as we go through winter, because there aren’t any more inventories to drain in the West,” according to Reuters.

American emergency reserves are already historically depleted. The Department of Energy announced another exchange of up to 40 million barrels from the Strategic Petroleum Reserve in late September as part of the administration’s response to global supply disruptions.

The U.S. reserve had already fallen below 300 million barrels for the first time in more than four decades as winter approached.

The U.S. is confronting the global supply crunch with a Strategic Petroleum Reserve that remains near its lowest levels in decades. The emergency stockpile was heavily drawn down in recent years, leaving Washington with a smaller cushion to respond to major disruptions in global oil supplies.

Energy Secretary Chris Wright has said the Trump administration is working to rebuild the reserve, though replenishing it depends in part on funding from Congress. Wright pointed to the reserve as an emergency tool the government can use to lend crude to refiners when supply disruptions threaten domestic fuel markets.

A particularly harsh winter could produce a “bloodbath” in the natural gas market during the first quarter of 2027 if inventories fall toward minimum operating levels, Petronas CEO Tengku Muhammad Taufik told the conference.