Aramco CEO's remarks highlight the fragility of global oil supplies
Amin Nasser, President and CEO of Saudi Aramco, issued a stark warning about the stability of global energy markets, revealing that the world had lost nearly one billion barrels of oil in just 60 days. His remarks, made in the context of the company's financial results, served as a clear reminder that oil and gas remain the cornerstone of global energy security, and that any disruption to their supply would have dire consequences.
Al-Nasser explained that the past two months have been a true test of the energy sector's resilience, emphasizing that even with the resumption of energy flows following the disruptions, the global system returning to normal and inventories restoring to safe levels will take considerable time. He stressed that these events underscore the critical importance of continued investment in the oil and gas sector to meet growing global demand and avert future crises.
Background to events: The September attacks and their impact on production
Al-Nasser's remarks date back to a critical period in global oil markets, specifically following the attacks on the Abqaiq and Khurais oil facilities in Saudi Arabia in September 2019. These unprecedented attacks led to a sudden halt in approximately 5.7 million barrels per day of crude oil production, representing more than 5% of global supply, causing the largest supply shock in the industry's history. This massive disruption is what al-Nasser referred to when he spoke of the "loss" of huge quantities of oil that had been destined for the global market, which resulted in a significant drawdown of global inventories to compensate for the shortfall.
Aramco's flexibility and its role in market stability
In response to this crisis, Al-Nasser emphasized Saudi Aramco's exceptional ability to handle emergencies. He noted that the company was able to restart the affected facilities and restore production to normal levels in record time. He attributed this rapid response to decades of prior investment in infrastructure and well-defined contingency plans, explaining that "an operation like this could have taken months without prior planning." This performance not only reassured markets but also reinforced the Kingdom's position as the world's most reliable oil supplier.
The repercussions of underinvestment on global energy security
The CEO of Aramco linked this crisis to a broader and more serious issue: the chronic underinvestment in the energy sector over the past years. He explained that declining capital spending on new exploration and production projects, driven by price volatility and pressure to shift towards renewable energy, has eroded global spare production capacity. This situation makes the market more vulnerable to shocks and sharp price fluctuations in the event of any supply disruption, as occurred after the September 11 attacks. This lack of investment has further strained global inventories, which have become the first and last line of defense against any emergency.
