Shipping and logistics now account for more than 30% of the cost of a barrel of oil, compared with less than 5% before disruptions to the Strait of Hormuz, according to ADNOC Managing Director and Group CEO Dr Sultan Ahmed Al Jaber.
Speaking at the opening of ADIPEC 2026 in Abu Dhabi on November 2, Al Jaber said the industry needed to judge energy security by its ability to deliver supplies to customers, rather than production alone.
He also reported that nearly one billion barrels of crude had been drawn from global inventories since the disruption, reducing the reserves available to cushion further shocks. ADNOC’s published account of his address confirms both figures.
Rising Delivery Costs Change the Energy Equation
Al Jaber’s remarks highlight the growing importance of transport and logistics in determining whether energy supplies reach their intended markets affordably.
Producing oil is only one stage of that process. Supplies must also move through storage facilities, terminals, shipping routes and distribution networks.
When those connections are disrupted, available production does not necessarily translate into accessible fuel.
The reported increase from below 5% to above 30% concerns logistics’ share of a barrel’s cost. It does not mean that the oil price itself increased by 30%, or that every shipment faces an identical charge.
Al Jaber did not provide a detailed route-by-route breakdown in the remarks supplied. The figures should therefore be understood as his assessment of the disruption’s effect on energy delivery costs.
Nearly One Billion Barrels Drawn From Inventories
Al Jaber warned that the prolonged disruption had weakened the buffers that normally help energy markets absorb interruptions.
Alongside the crude inventory drawdown, he identified pressure in diesel and liquefied natural gas markets.
| Indicator | Al Jaber’s assessment |
|---|---|
| Crude inventories | Nearly one billion barrels drawn down since the disruption |
| Diesel stocks | Lowest seasonal levels in 35 years in some markets |
| LNG availability | A supply gap of 600 billion cubic feet in some markets |
| Shipping and logistics | More than 30% of a barrel’s cost, compared with less than 5% previously |
Reuters also reported his warnings about depleted crude inventories, low seasonal diesel stocks and the LNG shortfall.
The qualifications matter. The diesel and LNG statements refer to particular markets, rather than identical conditions everywhere.
Similarly, an inventory drawdown means stored supplies have been used. It is not a measure of oil remaining underground or a claim that global petroleum resources have been exhausted.
Why Smaller Stockpiles Increase Vulnerability
Stored crude and refined products can help bridge the gap when production or deliveries are interrupted.
Drawing on those supplies can keep customers served during a disruption. However, a smaller buffer leaves less room to respond if another interruption follows.
Rebuilding inventories also requires supplies beyond those needed for ongoing consumption.
That creates a practical challenge for the industry: maintaining current deliveries while restoring the reserves that provide protection against future shocks.
The effects can differ between products. Having crude available does not automatically resolve a shortage of diesel if refining capacity or transport connections are constrained.
Al Jaber Sets Out Five Energy Security Priorities
Al Jaber proposed five areas of action: accessible supplies, routes to market, operational intelligence, investment confidence and people.
His proposals focused on preparing the wider delivery system before the next disruption occurs.
1. Expand Storage and Accessible Supplies
The first priority is larger strategic storage, stronger stocks of refined products and flexible refining capacity nearer consumer markets.
The practical aim is to make supplies available where they are needed.
Additional crude production can help, but its usefulness depends on whether refineries can process it and whether finished products can reach customers.
Storage and refining decisions therefore need to account for geography as well as volume.
2. Strengthen Routes to Market
Al Jaber’s second priority is infrastructure that enables energy to move reliably between producers and consumers.
He argued that this infrastructure must be developed before it becomes urgently necessary.
The wider implication is that resilience depends on preparation. A disruption can reveal a missing connection quickly, while replacing or expanding major transport infrastructure can take much longer.
3. Use More Intelligent Operating Systems
The third priority is moving beyond automated tasks towards systems that help anticipate risks, improve performance and reduce costs.
This places greater emphasis on using operational information to identify problems early and coordinate responses.
Such capabilities can support decision-making, but their value depends on the quality of the information available and how effectively people act on it.
4. Build Confidence for Investment and Trade
Al Jaber’s fourth priority connects policy, finance and insurance.
His argument is that investment needs confidence, while ongoing trade requires financing and insurance arrangements that remain workable under pressure.
Physical infrastructure alone cannot keep an energy system functioning if companies cannot finance shipments or manage the risks involved in moving them.
5. Invest in People
Al Jaber described people as the most important priority.
Behind each delivered shipment are employees responsible for operating facilities, coordinating logistics, maintaining equipment and responding when conditions change.
Technology can support those responsibilities. It does not remove the need for trained personnel, clear decisions and accountability.
ADNOC Points to Earlier Investments in Resilience
Al Jaber said the UAE’s ability to withstand disruption reflected preparations made before the crisis.
He cited ADNOC’s integrated trading operations, investment in employees, logistics capabilities and XRG’s international gas, chemicals and energy-solutions portfolio.
He described these elements as supporting an AI-enabled operating model intended to deliver energy where and when customers need it.
Those statements represent the company’s account of its preparedness. They do not imply that ADNOC or the UAE has been unaffected by the wider disruption.
Delivery Reliability Matters to Energy Consumers
For importing countries and businesses, the speech’s central distinction is between supplies that exist and supplies that can arrive on time.
A buyer’s final cost can be affected by freight, insurance, storage and delivery arrangements as well as the commodity price.
Consequently, a decline in the crude benchmark would not necessarily remove all the cost pressures created by disrupted transport.
Nor should Al Jaber’s 30% figure be applied directly to a country’s retail petrol or diesel price. Pump prices include other components, and local outcomes depend on the relevant purchasing and pricing arrangements.
UAE Backs Diplomacy to Stabilise Energy Flows
Alongside the operational proposals, Al Jaber reaffirmed the UAE’s support for dialogue and political solutions that stabilise markets and energy flows.
That reflects the limits of infrastructure preparation. Storage, alternative routes and improved logistics can reduce exposure, but they cannot eliminate the consequences of prolonged insecurity.
His message to delegates was that reliable energy supply requires coordinated action across production, transport, investment and workforce development.
The key test will be whether those priorities translate into stronger reserves and more dependable delivery before another major disruption occurs.
Frequently Asked Questions
How much do shipping and logistics contribute to a barrel’s cost?
Al Jaber said they now account for more than 30%, compared with less than 5% before the disruption.
Does that mean oil prices have risen by 30%?
No. The figure describes the reported share of costs associated with shipping and logistics, not the percentage increase in the oil price.
How much oil has been drawn from inventories?
According to Al Jaber, nearly one billion barrels of crude have been drawn from global inventories since the Strait of Hormuz disruption.
Are diesel stocks at a 35-year low everywhere?
No. His statement referred to the lowest seasonal levels in 35 years in some markets.
What were his five priorities?
Accessible supplies, reliable routes to market, operational intelligence, investment confidence and people.
Where did he make the remarks?
At the opening of ADIPEC 2026 in Abu Dhabi on November 2, 2026.
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