Aramco CEO says Russia embargo adds to uncertainty, energy transition "flawed"

Quantum Commodity Intelligence – Saudi Aramco CEO Amin Nasser said on Wednesday that tightening EU embargoes on Russian crude and products were adding to the uncertainty in the global oil market.

But the Aramco chief added the market is already adjusting to sanctions on Russia, with Moscow redirecting crude flows to Asia from Europe and other producers making the opposite switch.

"Realignment is happening," Amin Nasser, chief executive officer of the world's biggest oil company, said at the Future Investment Initiative event in Riyadh.

"Russians, with the right discount, are able to place their crude in different markets," said Nasser, according to Bloomberg, reporting from the forum.

Those discounts are helping Russia overcome the difficulties it has securing insurance and shipping for its oil, Nasser said, as the US and Europe tighten sanctions following the invasion of Ukraine.

"There are logistical issues, insurance issues," Nasser said. "But that's being handled with the right discounts. The flow is going to Asia -- though, it takes longer. And crude that used to go to Asia is now being directed to Europe and other parts of the world."

Saudi Arabia and Russia are the world's biggest oil exporters, while  Riyadh typically ships around 60% of its crude shipments to Asia - primarily to China, Japan, India and South Korea.

However, in the past six months, India's crude purchases from Saudi Arabia have fallen by roughly 20%, according to data compiled by Bloomberg.

Transition

He also told the forum that the current global energy transition plan is failing to deliver, urging the world to utilise conventional hydrocarbons in tandem with developing cleaner and lower carbon resources.

"The current transition is flawed," Nasser said in his comments at FII, adding that it is "not delivering".

"We need to work in parallel until alternatives are ready to shoulder a bigger piece of the growing energy demand in the future," Nasser said, adding that coal consumption is on the rise.

"We see today if you look at coal it is 8 billion tonnes, this is the highest since 2013. The cost of coal per barrel of oil equivalent is $60-$80, so basically we are transitioning to coal."

Nasser said the market for blue hydrogen was "building up" but that it was so far costly at around $200-$300 per barrel of oil equivalent.