Diesel stocks hit 35-year seasonal lows in some markets as shipping costs rise to 30% of barrel value and Brent crude trades near $110
ABU DHABI: Global oil inventories have declined by nearly 1 billion barrels since the US-Israeli war on Iran disrupted shipping through the Strait of Hormuz, significantly reducing supply buffers as fuel prices and transportation costs rise, Abu Dhabi National Oil Company (ADNOC) Chief Executive Sultan Al Jaber said on Monday.
Speaking at the ADIPEC energy conference in Abu Dhabi, Al Jaber said diesel inventories in some regions had fallen to their lowest levels for this time of year in 35 years, while other markets were facing a liquefied natural gas (LNG) supply shortfall of 600 billion cubic feet.
Diesel prices have reached record highs in several markets following wartime supply disruptions, increasing inflationary pressures and the cost of living for consumers.
Al Jaber called for expanded strategic storage capacity, larger fuel stockpiles and greater refining flexibility closer to major consumer markets to strengthen energy supply security.
He said shipping and logistics costs had increased to 30% of the cost of a barrel of oil, compared with 5% before the war began.
International benchmark Brent crude was trading at approximately $110 per barrel, around 50% higher than its level in February, before the conflict started.
The disruption has prompted emergency measures to increase global fuel supplies.
In October, the International Energy Agency (IEA) agreed to release more than 20 million barrels of diesel into the market, alongside any oil remaining from the record emergency reserves release pledged in March.
The measures were intended to increase available supplies and ease rising fuel prices amid continued disruption to energy shipments.
The decline in global inventories has also raised concerns among major oil producers about the availability of commercial reserves.
Saudi Aramco Chief Executive Amin Nasser said last month that fewer than 6 billion barrels of commercial oil inventories remained worldwide, with the vast majority not practically available for immediate use.
The reduction in inventories comes as disruption to shipping through the Strait of Hormuz continues to affect international energy markets, increasing transportation expenses and putting pressure on fuel supplies.
Al Jaber said governments and energy companies needed to invest in storage infrastructure, refining capacity and advanced logistics before future supply disruptions occurred.
