Global Fuel Reserves Decline Rapidly Amid Iran War and Disruption in Strait of Hormuz

Global energy reserves are rapidly shrinking as the Iran war and disruptions to shipping through the Strait of Hormuz continue to affect fuel supplies worldwide.

Nearly one billion barrels of oil have reportedly been withdrawn from global inventories since the war began. This could make it increasingly difficult for the world to cope with further supply disruptions, Sultan Al Jaber, chief executive of Abu Dhabi National Oil Company (ADNOC), has warned.

Al Jaber issued the warning at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), recently held in the United Arab Emirates (UAE).

"Diesel inventories in some parts of the world have fallen to their lowest seasonal levels in 35 years. Meanwhile, some markets are facing a liquefied natural gas (LNG) shortfall of 600 billion cubic feet," he said.

The ADNOC chief stressed that countries need to strengthen their strategic energy reserves to ensure energy security.

He also called for increased storage of refined petroleum products and expanded refining capacity closer to consumer markets.

According to Al Jaber, governments and energy companies must invest more in infrastructure and supply chains before another crisis emerges.

The cost of transporting and supplying crude oil has also risen sharply. Before the war, transportation and supply expenses accounted for around 5 per cent of the price of a barrel of crude oil. That figure has now climbed to approximately 30 per cent.

Meanwhile, the international benchmark Brent crude price has recently surged to around $110 per barrel, nearly 50 per cent higher than in February.

Separately, Amin Nasser, chief executive of Saudi Arabia's state-owned oil giant Saudi Aramco, said last month that global commercial oil inventories had fallen below six billion barrels.

A significant portion of those reserves, however, is not immediately available for use.

The declining stockpiles and mounting transportation costs have intensified concerns about the global energy market's ability to withstand further supply disruptions.