Saudi Aramco CEO Warns of Global Energy Crisis If Hormuz Disruption Persists

Global energy markets can face a huge impact if the disruption in oil shipments through the Strait of Hormuz continues due to the conflict between the US and Iran, Saudi Aramco has warned.

Saudi Aramco CEO Amin Nasser said: 'Even though we have faced disruptions in the past, the current crisis is the biggest the oil and gas industry has faced in the region.'

The disruption in shipping through the strategically important waterway has halted oil deliveries from the Persian Gulf region since the US attack on Iran around 11 days ago. The situation is expected to remove around 20 million barrels of oil per day from the global market.

Aramco said it can still supply around 70% of its normal exports by redirecting shipments through the East-West pipeline to the Yanbu port in the Red Sea. The company aims to increase the pipeline's capacity to 7 million barrels per day in a few days, with around 5 million barrels per day allocated to export markets.

However, Nasser emphasized that a prolonged disruption will put pressure on the global energy and economy. 'There will be a disastrous consequence for the world oil market. The longer this disruption lasts... the more drastic the consequences will be for the global economy.'

Normally around 100 oil tankers pass through the Strait of Hormuz every day. However, the number has dropped drastically after the Islamic Revolutionary Guard Corps threatened to attack ships using the route. The Strait of Hormuz is a major route for around 20% of the world's traded oil and gas.

In the midst of the tension, Brent crude oil prices surged to a level of $119 per barrel, the highest since the 2022 Russian invasion of Ukraine. However, prices then dropped to around $85 per barrel after Donald Trump expressed confidence that the conflict can be resolved soon.

Meanwhile, G7 countries have asked the International Energy Agency to prepare a scenario for the release of emergency oil reserves to stabilize the market. The agency has a stockpile of over 1.2 billion barrels of government-held oil reserves, in addition to around 600 million barrels of industry-held stockpiles for global supply disruptions.