Saudi Aramco seeks overseas oil stockpile expansion after Iran war

 

Saudi Arabia and state oil giant Aramco are seeking partnerships to expand overseas oil storage after the Iran war exposed vulnerabilities in the kingdom’s energy network, CEO Amin Nasser said Thursday in an interview with Al Arabiya Business.

Nasser said oil demand could rise by about 3 million barrels per day once the Iran war ends and conditions normalize, including about 2 million bpd in additional consumption and another 1 million bpd needed to replenish depleted inventories.

Aramco is also studying additional crude export routes as the war has exposed the vulnerability of major shipping chokepoints including the Strait of Hormuz, Bab al-Mandab and Suez.

Saudi oil production fell below 7 million bpd for much of the first six months of the war, from more than 10 million bpd before the conflict, according to the International Energy Agency. Output recovered to about 8 million bpd in September.

The kingdom has relied on its East-West pipeline to move crude from its eastern oil fields to the Red Sea, bypassing the Strait of Hormuz. The pipeline has capacity of around 7 million bpd, and Aramco is working on plans that could eventually raise it to 10 million bpd.

But the pipeline itself has also come under attack during the conflict. Saudi Arabia said in September that drones launched from Iraq struck the East-West pipeline.

Aramco’s wider infrastructure has also faced attacks by Yemen’s Iran-backed Houthis. A Houthi strike on the company’s headquarters in Dhahran earlier this month caused extensive damage, with fire spreading across several floors.

Saudi authorities also said air defenses intercepted a drone attempting to hit an Aramco facility at the Shaybah oilfield Wednesday, killing two people.

Aramco's push for additional storage comes as global oil inventories have been sharply depleted by months of supply disruption. Nasser said earlier this month that nearly 3 billion barrels of gross oil supply had been lost during the crisis and more than 1 billion barrels had been drawn from inventories. He said replenishing stocks while meeting normal demand could take as long as two years.

The company has also overhauled its ability to operate and repair infrastructure under attack. Aramco uses drones to inspect damage while incidents are still underway, and about 90% of materials required for repairs are either produced domestically or held in Saudi warehouses.

“Today, our teams can handle multiple incidents simultaneously, and we continue to build this capability,” Nasser told Reuters in an earlier interview.

https://www.iranintl.com/en/202610222098