The chief executive of Abu Dhabi's state-owned Adnoc, Sultan al-Jaber, warned today that the world's energy supply buffers have been all but "eroded" as governments have been forced to draw on their strategic stocks to compensate for the loss of supplies from the Mideast Gulf region.
Speaking at the opening of the Adipec conference in Abu Dhabi, al-Jaber called on the world to learn from the lessons of the current crisis, which has seen shipments through the critically important strait of Hormuz disrupted for more than eight months.
"Since the strait of Hormuz was disrupted, nearly 1bn barrels [of oil] have been drained from global inventories," al-Jaber said. "In some markets, stocks of diesel are at their lowest seasonal level in 35 years, and others are facing a 600bn ft³ LNG supply gap."
Shipments through the strait have recovered somewhat since the early days of the US-Iran war, with the latest Kpler data putting flows of crude and condensate at 8.45mn b/d in October, close to 60pc of what was going through in February, just before the war began.
But the availability of supply is only half the story, al-Jaber said, highlighting the steep jump in the cost of moving this oil and energy from the Mideast Gulf to consumers.
"Before the disruption, shipping and logistics were less than 5pc of the cost of a barrel. Today, they are more than 30pc," al-Jaber said. "Energy security is not only measured at the point of production. It is now also measured at the point of delivery."
Global energy systems need to focus more on making energy "accessible," al-Jaber said, highlighting the need for expanded strategic storage, larger stockpiles of products and more refining capacity that is located closer to consumer markets.
He also stressed the importance of having more ways of getting energy to market. "Supply only counts when it arrives," al-Jaber said. "Infrastructure must be built before it is needed and enabled by advanced logistics."
The UAE was one of just two Mideast Gulf countries, along with Saudi Arabia, that had oil export infrastructure capable of bypassing the Hormuz strait when the war began, putting it in a far better position than most to navigate this period.
The latest data shows that the UAE has not only recovered its production from the early days of the Hormuz crisis, but recently lifted it to above pre-war levels.
Argus estimated UAE production at around 3.9mn b/d in September, up from 3.53mn b/d in February, before the war started, and as low as 1.9mn b/d in March, the first month of the crisis.
