Brent crude prices would have reached up to $200 per barrel if Saudi Arabia's East-West pipeline did not exist, the chief executive of Saudi Aramco said.
The company can make its maximum sustainable production capacity of 12 million barrels per day available within days, Amin Nasser told the Energy Intelligence Forum in London on Monday.
“Our system is intact,” Mr Nasser said. Aramco has the strategic reserves and flexibility to isolate or shift output as required, he added.
Brent crude, the benchmark for two thirds of the world's oil, has been trading around $100 a barrel over the past month, even as more tankers are transiting the Strait of Hormuz.
Saudi Arabia has been playing a vital role as Aramco over the past month boosted crude shipments from its main export terminal at Ras Tanura. The company reacted quickly to a temporary halt to its main cross-country pipeline after an attack last month.
Aramco has since brought flows on the East-West pipeline back to about 80 per cent of capacity, meaning it also has more oil to ship from the Red Sea.
Aramco has ensured its oil supplies proved resilient throughout the conflict by relying on international storage and working to quickly repair damaged infrastructure, Mr Nasser said. He did not mention reports of recent attacks on the kingdom in his speech.
Aramco is looking for alternative crude export routes and additional international storage facilities to avoid relying too much on any single method of reaching global buyers, he added.
'Scarily thin' reserves
However, the oil stockpiles that cushion the world from supply shocks have become “scarily thin”, putting markets at risk of worsening unless the Strait of Hormuz fully reopens, Mr Nasser said.
He was speaking only days after governments in the world’s biggest economies announced plans to release as much as 100 million barrels of emergency oil and diesel stocks to ease rising fuel costs.
“Until Hormuz fully reopens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify,” he said. “While the squeeze on crude is serious, refined fuel prices have risen even more sharply.”
Releasing stockpiles will buy economies some time but will not fix the imbalance between supply and demand, Mr Nasser said. Even after the vital shipping chokepoint at Hormuz reopens, it may take as long as two years for energy-consuming countries to replenish their stockpiles, he said.
Gulf producers are working to step up production and exports and have succeeded in boosting crude flows to near prewar levels. The higher flows have provided scant relief for oil markets, which are still pricing in security risks to supply in the Gulf and Red Sea.
With inputs from Bloomberg and Reuters
