Governments worldwide may need to follow US president Donald Trump’s move to tap emergency oil stockpiles if top exporter Saudi Arabia is unable to quickly repair the damage inflicted by attacks on its energy industry on Saturday (14).
The attacks halted 5.7 million barrels per day (bpd) of crude production, more than half of Saudi Arabia’s current output, or more than 5 per cent of global oil supply.
Trump said on Sunday (15) he had authorised a release from the US Strategic Petroleum Reserve (SPR) if needed.
The United States is the world’s top oil consumer and a leading producer. The US SPR, held in underground storage caverns on the Texas and Louisiana coasts, currently contains nearly 645 million barrels, or about the amount the United States consumes in a month.
The United States has another 416.1 million barrels sitting in commercial storage, according to the US Energy Information Administration’s most recent data. Those are held by oil producers, refiners and traders.
Saudi Arabia has said it would use oil in storage to fill tankers for customers. The country has about 188 million barrels in reserve, according to a note on Saturday from Rapidan Energy Group.
The IEA advises member countries to keep the equivalent of at least 90 days of net oil imports in strategic storage.
Top oil importer China is the biggest importer of Saudi Arabian crude. China also has large strategic reserves, but last released figures on the size in April 2017.
Ryan said it was a matter of time before governments would run through their commercial stockpiles, and be required to tap emergency reserves.
“The market could tighten significantly if the outage is indeed weeks and not days. You will see SPR draws. Arguably the world is dependent on strategic reserves right now,” he said.