The global energy market has lost more than 2.6 billion barrels of oil since the war with Iran began in February, creating a supply deficit equivalent to nearly a month of normal global production, state-owned Saudi Aramco noted on Tuesday in its earnings call.
According to Saudi Aramco CEO Amin Nasser, the closure of the critical Strait of Hormuz chokepoint has severely depleted global inventories.
Nasser warned that even if the strait were to reopen immediately, it would take up to 18 months at an average rate of 2.1 million barrels a day just to replenish depleted stock levels.
The conflict has expanded to a second front in the Red Sea, following Houthi announcements of a blockade targeting Saudi Arabia's oil sector and attacks on installations at Red Sea ports.
While Aramco has utilized alternative routes, such as ramping up capacity through the East-West Pipeline to Yanbu, recent attacks have caused minor production interruptions.
Aramco's total hydrocarbon production averaged 9.5 million barrels per day during Q2, down from 12.8 million barrels a year earlier.
Nasser cautioned that the oil industry holds dangerously few buffers in case of more upheaval.
With global refineries operating near maximum utilization rates and earning strong margins, continued disruption through the Strait of Hormuz and threats to the Bab el-Mandeb Strait pose a long-term risk to the global economy, the company said.