Aramco chief says Saudi pipeline kept oil from reaching $200

Oil could have climbed to $200 a barrel without Saudi Arabia’s East-West pipeline, Saudi Aramco chief executive Amin Nasser said, putting a price on the importance of an alternative route to market. According to The National — Business, Nasser told an Energy Intelligence conference in London on Monday that the pipeline had helped cushion the supply shock. His estimate compares with Brent crude trading around $100 a barrel over the past month.

The warning came alongside an assurance about Aramco’s ability to supply oil. Nasser said the company could make its maximum sustainable production capacity of 12 million barrels a day available within days. That figure describes the production rate it can maintain, rather than its current output. He said Aramco’s network remained intact, with strategic reserves and enough flexibility to separate parts of its operations or move production when needed.

“Our system is intact,” Nasser said.

A second route carries more weight

The East-West pipeline itself has faced disruption. An attack last month briefly stopped the main cross-country route, prompting a rapid response from Aramco. Flows have since recovered to about 80% of capacity, giving the company more crude to export through the Red Sea. That recovery has restored much, though not all, of the pipeline’s ability to carry oil across the kingdom.

Aramco has also increased shipments from Ras Tanura, its main export terminal, over the past month. Saudi Arabia has been an important contributor to the rise in tanker traffic through the Strait of Hormuz, the vital shipping passage for the region’s oil. Yet those additional movements have not brought substantial relief to prices. Brent, the benchmark used to price roughly two-thirds of global oil, has remained near $100.

Nasser credited storage outside Saudi Arabia and quick repairs to damaged infrastructure with keeping Aramco’s supplies resilient through the conflict. The company is now seeking other crude export routes and more international storage facilities. The goal, he said, is to avoid depending too heavily on any one way of getting oil to buyers. He did not address reports of recent attacks on the kingdom in his speech.

Emergency barrels buy time, not a solution

The larger problem is the shrinking cushion of stored oil. Nasser warned that global stockpiles had become dangerously thin, leaving markets vulnerable to further pressure unless Hormuz fully reopens. His remarks followed announcements by governments in the world’s biggest economies that they planned to release up to 100 million barrels of emergency oil and diesel reserves to help contain rising fuel costs.

Those releases can give economies breathing room, but they cannot resolve the gap between supply and demand, Nasser said. The strain also extends beyond crude oil: prices for refined fuels, the products made from it, have risen more sharply. He warned that pressure on both crude and fuel markets would increase until the strait fully reopened and confidence returned.

Gulf producers have lifted crude flows to close to prewar levels, but markets continue to price in the risk of supply disruptions in the Gulf and Red Sea. The next milestones are a full reopening of Hormuz and the rebuilding of depleted reserves. Even once the passage reopens, Nasser said, energy-consuming countries could need as long as two years to replenish their stockpiles.