Saudi Arabia imported 360,000 barrels of fuel oil per day in April—86% more than a year earlier, according to Vortexa data cited by Reuters. The world's largest oil exporter is now buying fuel to burn for electricity because its natural gas production is falling, not rising. The irony would be amusing if the timing weren't so dire.
The kingdom has shut in over 3 million barrels daily of crude production since the Strait of Hormuz closure began, and with it, associated natural gas extraction has dropped , Rystad Energy reported. Summer is peak season for air conditioning in Saudi Arabia, and this year fuel oil and crude consumption for power generation could top 1 million barrels daily —oil that would otherwise flow to export terminals. Every barrel burned at home is a barrel not sold abroad, and at current prices, that's roughly $75 million in foregone revenue each day.
This is happening while global oil stockpiles are being drawn down at a record 8.7 million barrels per day so far in May, nearly double the average pace since the conflict began , Goldman Sachs reported Tuesday. The math is unforgiving. Strategic reserves were built for exactly this scenario, but they cannot be drained indefinitely.
Can Renewables Fill the Gap Fast Enough?
April delivered an unexpected milestone. Wind and solar generated more electricity than gas globally for the first time ever, producing 22% of the world's electricity compared to 20% from gas—531 terawatt-hours versus 477 TWh , according to energy think tank Ember. Five years ago, gas generation stood at nearly the same level. Wind and solar? Less than half of today's output.
The timing is notable—April marked the first full month of the latest global energy crisis , Ember noted. Yet the numbers weren't driven by the crisis itself but by years of rapid renewable growth that met most of the increase in global electricity demand, helping limit growth in gas generation . The current energy shock didn't create this shift. It merely revealed it.
The contrast is stark. Saudi Arabia, sitting atop some of the world's largest gas reserves, is regressing toward oil-fired power. The kingdom's flagship Jafurah gas field began production late last year with a $100 billion price tag, described as the largest unconventional gas development outside the United States . But that production ramp takes time, and summer doesn't wait.
How Long Can Emergency Reserves Last?
U.S. Strategic Petroleum Reserve inventories fell by 9.9 million barrels in the week ended May 15, following a decline of 8.6 million barrels the previous week, taking total SPR volumes down to 374 million barrels , Standard Chartered reported. These are the largest consecutive weekly declines on record.
Context matters. The IEA's 32 member countries pledged a record 400 million barrels from strategic reserves after Iran's Hormuz blockade—more than double the 182.7 million barrels released during the 2022 Ukraine war response . The United States committed 172 million barrels, shouldering the lion's share . At current drawdown rates, the strategic reserve could drop to its lowest levels since the 1980s if withdrawals continue at this pace , according to analysis cited by Standard Chartered.
The physical infrastructure imposes hard limits. The SPR's maximum withdrawal capacity is 4.4 million barrels per day, while the operational minimum is a statutory limit of 150 million barrels . Do the math: the U.S. is roughly 224 million barrels above the floor. At 9 million barrels per week, that's about 25 weeks of runway—if nothing changes.
More than ten weeks after the war began, mounting supply losses from the Strait of Hormuz are depleting global inventories at a record pace, with benchmark oil prices posting wild swings in response to conflicting signals on whether the U.S. and Iran will reach a deal , the IEA noted in its May Oil Market Report. North Sea Dated traded in an unprecedented wide range of almost $50 per barrel in April, surging to an average of $120.36 per barrel .
