Well, bless their hearts. The head of Saudi Aramco, Amin Nasser, stood up in London on Monday and told the world what any of us could’ve told you months ago for free: the global oil cushion is, in his own words, “scarily thin.” Not “concerning.” Not “facing headwinds,” whatever that means. Scarily thin. When the man who sells the oil for a living starts using the word “scary,” I’d suggest you listen.
Here are the numbers, and they’re not small ones. The seven-month war involving the U.S., Israel, and Iran has knocked nearly 3 billion barrels of supply out of the region. That’s about half of what would’ve normally sailed through the Strait of Hormuz, the little waterway that carries roughly a fifth of the world’s oil and gas. More than a billion barrels have already been drained out of reserves to paper over the hole, and what’s left of commercial inventories is under 6 billion barrels, most of which Nasser says isn’t even “practically available.”
And the fix? Up to two years. Two years to refill the tank, and that’s the good scenario, assuming Hormuz fully reopens and “confidence returns.” Until then, in his words, “pressure at both ends of the barrel will intensify.” I don’t know about you, but I don’t need a translator to figure out what that means at the pump.
Now here’s the part where I have questions for the manager. The G7 governments, ours included, agreed Friday to release 100 million barrels of diesel and crude from strategic reserves, on top of the 300 million-plus already tapped. And I’m supposed to clap? That’s a band-aid on a hemorrhage, and everybody in the room knows it. Nasser said the majority of what’s been deployed so far came out of company reserves, which he called “the last major tool in the box.” The last tool in the box, and we’re seven months into this thing. What exactly was the plan when they started? Was there a plan? Or was it all press conferences and emergency announcements, right on schedule, after the pain already arrived?
Because that’s the pattern, isn’t it. The experts tell you everything is fine until the man whose entire job is counting barrels stands up and says actually, no, it’s scary. Then the bureaucrats hold a meeting, release a fraction of what’s needed, and go back to telling you the adults are in charge. Meanwhile the strategic reserves, the ones you and I paid for with our tax dollars, keep getting skimmed like a milkshake at a teenager’s sleepover. Those reserves exist for a rainy day. It’s been raining for seven months, and somebody’s been drinking the milkshake.
And let’s be honest about the folks who spent years telling us we wouldn’t need oil anymore, that we’d all be puttering around on sunshine and good intentions by now. The same crowd that fought pipelines at home is now watching a fifth of the world’s oil squeeze through one narrow strait on the other side of the planet and acting shocked, shocked, that prices wobble. You don’t have to be a geologist to see the problem with putting all your eggs in one basket and then letting somebody else hold the basket.
Nasser’s warning is simple, and it’s the kind of simple the suits can’t stand: the cushion is gone, the reserves are being drained, and it’ll take two years of everything going right to get back to normal. Everything going right. In this economy. I’d say keep your tank full and your expectations low, but that’s just common sense, and common sense stopped being policy a long time ago.