Anthony Di Paola
The world needs greater capacity to store oil and produce fuels closer to consumers to tackle the impact of the severe disruption to the Strait of Hormuz, according to the head of the biggest energy company in the United Arab Emirates. There's also a need to adapt transportation routes to get supply to users, Sultan Al Jaber, the chief executive officer of Abu Dhabi National Oil Co., said at the opening of the Adipec conference. "We need expanded strategic storage, larger stockpiles of products and flexible refining capacity closer to consumer markets," he said. "Second, routes to market. Supply only counts when it arrives. Infrastructure must be built before it is needed and enabled by advanced logistics."
The eight-month war in the Middle East sent the supply lines and energy markets into turmoil after shipping traffic through the crucial Strait of Hormuz was severely disrupted by Iranian attacks on tankers. The interruption has drained nearly 1 billion barrels of oil from global inventories, with some markets facing diesel stocks at their lowest seasonal level in 35 years, and caused a shortfall in supply of liquefied natural gas, Al Jaber said. He was speaking at the biggest gathering of energy executives in the Middle East since the war in the region started at the end of February. There have been increasing fears in recent days that the conflict might reignite, which has helped drive oil prices in London to $110 a barrel and natural gas in Europe to over €100. Prices, however, eased on Monday after a report said President Donald Trump wants to give diplomacy more time before deciding whether to resume strikes on Iran following Tuesday's midterm elections.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing