Hardy said the conflict first triggered a crude oil crisis and then developed into a refined products crisis. Now, he said, more oil is coming from the Middle East, but a transport crisis is growing because there are not enough vessels to move the fuel.
In Hardy’s view, supplies from the Persian Gulf are now especially important to keep uninterrupted. He added that without reserves, the market is left with a $200-per-barrel scenario.
At the same conference, Saudi Aramco CEO Amin Nasser said that global oil reserves that help protect against shocks are “frighteningly small”. According to him, before the start of the war with Iran, commercial and strategic reserves amounted to about 10 billion barrels, but now they have fallen to less than 6 billion, although only about 10% of that volume is actually available because of technical constraints.
The International Energy Agency assessed the decline more mildly: since the start of the war, commercial inventories worldwide have fallen by 507 million barrels, or 2.8 million barrels per day. In August, the rate of decline accelerated to 95 million barrels, or 3.1 million barrels per day, as market participants were forced to draw on reserves.
The IEA reminded that in March developed countries agreed to release 400 million barrels onto the market, and on Friday the G7 countries decided to add another 100 million barrels of diesel and crude oil, without specifying the proportions. Hardy called the details of this announcement “not entirely transparent” and warned that until the Strait of Hormuz is fully open and the market regains confidence, pressure on both ends of the supply chain will intensify.
Hardy also described the current method of exporting oil from the Persian Gulf: some tankers pass through the Strait of Hormuz under the protection of U.S. warships, and in the Gulf of Oman the oil is transferred to other vessels. He called this method very inefficient because tankers sit idle for several days or weeks, and freight rates have risen sharply as a result.
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