ADNOC warns global energy buffers have eroded as war-driven disruptions lift fuel costs

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ADNOC warns of energy risks

Highlights

ADNOC CEO Sultan Al Jaber reports global oil inventories have fallen by nearly 1 billion barrels since the US-Israeli war on Iran disrupted shipping.
Diesel prices in many markets have reached record highs as diesel stocks hit 35-year lows and LNG faces a 600 billion cubic feet supply gap.
Brent crude trades around $110 a barrel, up 50% since February, while emergency reserves releases attempt to offset reduced commercial inventories below 6 billion barrels.

Inventory drawdowns and supply strain

As reported by BusinessWorld Online, ADNOC Chief Executive Sultan Al Jaber says the world has drained nearly 1 billion barrels from global oil inventories since the U.S.-Israeli war on Iran disrupted shipping through the Strait of Hormuz. Speaking on Monday at the UAE's ADIPEC conference in Abu Dhabi, he says diesel stockpiles in some areas are at 35-year lows for this point in the season, while other markets face an LNG supply gap of 600 billion cubic feet.

Al Jaber says wartime supply disruptions have pushed diesel prices in many markets to record highs and increased pressure on household budgets and national inflation. He adds that shipping and logistics costs have risen to 30% of the cost of a barrel, up from 5% before the Iran war.

He calls for expanded strategic storage, larger product stockpiles and more flexible refining capacity closer to consumer markets. He also says infrastructure needs to be built before it is required and supported by advanced logistics.

Higher prices and pressure on emergency reserves

Brent crude is trading around $110 a barrel, up about 50% from February, just before the war began. The rise underscores how conflict-related bottlenecks are feeding through to energy benchmarks and downstream fuel costs.

Last month, the International Energy Agency agreed to release more than 20 million barrels of diesel to the market, along with any oil remaining from a record emergency reserves release pledged in March to boost supply and cool prices. Saudi Aramco Chief Executive Amin Nasser also said last month that fewer than 6 billion barrels of commercial inventories remained, with most of that volume not practically available.

In our earlier article on the surge in crude oil shipping costs, we highlighted how conflict-related risks in routes such as the Strait of Hormuz and the Red Sea drove tanker and insurance rates sharply higher. We noted that freight was becoming a much larger share of the delivered oil price, squeezing import-dependent markets and feeding through from fuel costs into broader inflation.

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