Oil Production is Approaching Prewar Levels, But Aramco’s CEO Warned Replenishing Inventories Could Take Years

Saudi Aramco CEO Amin Nasser said the replenishment of oil inventories could take up two years even as production gets back near the levels seen before the war in Iran began.

Speaking at the Energy Intelligence conference in London, Nasser also warned that the squeeze on supplies could also worsen still.

"Replenishing inventories while meeting demand could take up to two years," Nasser said. He went on to note that about 3 billion barrels of oil have been lost since the war began and 1 billion barrels have been released from strategic stockpiles.

The company has been under strain over the past weeks as a result of attacks by Iran-backed Houthi rebels from Yemen, who have imposed an embargo on Saudi oil and targeted facilities across the country.

In fact, the group alleged on Saturday it struck an Aramco facility. "In response to the Saudi aggression against the capital Sana'a and the liberated provinces ... the Yemeni Armed Forces have carried out a qualitative military operation using a number of ballistic missiles and drones targeting Aramco Company in the Saudi enemy's capital, Riyadh," Brigadier General Yahya Saree, the Houthi military spokesman said in a statement on Saturday.

However, the internationally-recognized, Saudi-backed government in Yemen, which has been at war with the Houthis for over a decade, stated on Saturday that the Houthis' claims of attacking Riyadh were a misleading attempt to distract from their own losses.

Aramco recently resumed oil shipments through its key East-West pipeline after sustaining multiple hits. The pipeline transports about 4% of global oil supplies.

Saudi Arabia's exports recently reached the highest level since the war in the region began in late February. Flows through the Strait of Hormuz have picked up recently, aided by Iran's diminished military capabilities and a major U.S. Navy operation that has helped secure portions of the waterway for shipping.

However, consumers likely won't see reprieve due to the need to replenish inventories. At the same time, refining infrastructure across the Middle East has been damaged, restricting the region's ability to turn crude oil into the fuels consumers and businesses actually need.

In fact, Chinese refiners reportedly banned fuel exports in October. The report in question, published by Reuters lats week, noted that Beijing made the decision to preserve domestic stocks. The country had already made such a decision in March after the war between the U.S. and Iran began.