Saudi Aramco Says Global Gasoline and Jet Fuel Inventories Near Critical Point

[The Financial News]  
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Saudi Arabian Oil Company (Saudi Aramco), the world's largest oil company, warned on the 11th local time that global gasoline and jet fuel inventories would fall to "critically low levels" ahead of the summer travel peak.
According to the Financial Times (FT), Amin H. Nasser, CEO of the Saudi state oil company, said that if the Strait of Hormuz remains blocked, global inventories of petroleum products will reach a critical point.
Nasser warned that land-based inventories of refined products are being depleted rapidly, with gasoline and jet fuel disappearing the fastest.
He said that since the Iran war began, the closure of the Strait of Hormuz has reduced global oil supply by a cumulative 1 billion barrels, and that another 100 million barrels are disappearing each week.
Nasser noted that inventories are the only buffer preventing a surge in oil prices, but said they are "effectively declining."
International oil prices have been swinging sharply in response to remarks by U.S. President Donald Trump regarding the Iran war. Brent Crude Oil briefly surged to $126 per barrel in late last month before later falling below $100.
It closed that day up 2.9% at $104 per barrel.
Even amid volatile oil prices, Asian countries that rely heavily on Middle Eastern crude are seeing a gradual erosion in oil demand.
In an analysis report released on the 11th, JPMorgan Chase said it expects commercial oil inventories held by refiners in advanced economies to fall to a level that could disrupt operations by early June. If that happens, one of the buffers that has helped prevent a global oil price spike despite supply disruptions caused by the closure of the Strait of Hormuz would disappear.
JPMorgan Chase said this sense of urgency will ultimately leave the United States with no choice but to strike a deal with Iran, and predicted that the standoff between the two sides will also come to a halt under such unavoidable pressure, leading them to a compromise.
If no agreement is reached in the end, refined product prices will soar and a global inflationary shock will follow, JPMorgan Chase warned.
Natasha Kaneva, head of global commodities strategy at JPMorgan Chase, said, "Our conclusion is that, one way or another, the Strait will reopen in June."
Kaneva added, however, that the market would not pay attention to President Trump's baseless unilateral declaration of victory. She said the market would believe it only if there were "clear, credible announcements, ratification, and confirmation from both sides."
Kaneva warned, "The next oil shock will be closer to a crisis for refined products and end users of fuel than to a traditional spike in crude prices."
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dympna@fnnews.com Song Kyung-jae Reporter