Aramco: Global Oil Supply Crisis Exposed by 3 Million Barrel Refinery Capacity Loss

The current global oil supply crisis has highlighted the weakness of investment in the oil refining sector in recent years, according to Saudi Arabian energy company Aramco.

Musaab Al Mulla, Aramco's Vice President of Market Analysis and Sustainability, stated that the loss of refinery capacity between 2020 and 2023 has made the energy market more vulnerable to disruptions.

About 3 million barrels per day of global oil refining capacity were shut down during this period.

"If we had these refineries, we might have reduced the impact of the current crisis," Al Mulla said.

He made this statement at the Middle East Oil and Gas Conference by S&P Global Energy in London.

This comes as the global energy market faces pressure due to the war in Iran, attacks on energy infrastructure, and the blockade of the Strait of Hormuz.

These disruptions have cut off around 14 million barrels per day of oil supply from Middle Eastern producers to the global market.

Aramco believes that the resilience of the downstream sector is crucial in mitigating the impact of supply shocks.

Lack of investment in refining capacity has left the energy industry with limited room to maintain supply stability and price stability during crises.

The International Energy Agency (IEA) has also expressed similar concerns, warning that global oil stocks could fall to critical levels if Middle Eastern supply disruptions continue.

According to the IEA, the loss of around 14 million barrels per day of oil supply from the Gulf region is one of the largest shocks the global energy market has faced in recent decades.

Meanwhile, the latest data shows that US refinery utilization has reached 94.7%.

At the same time, US oil exports have surged to 5.9 million barrels per day, driven by increased demand from Asian and European buyers seeking alternative supplies outside the Middle East.