The oil market would experience “catastrophic consequences” if the halt to Strait of Hormuz tanker traffic continues, according to Saudi Aramco, the world’s top crude exporter and biggest oil firm.
“There would be catastrophic consequences for the world’s oil markets and the longer the disruption goes on, and the more drastic the consequences for the global economy,” Aramco’s chief executive Amin Nasser said on the 2025 earnings call on Tuesday, as carried by Reuters.
The oil flow disruption will accelerate the pace of drawdowns at global inventories, which are already at a five-year low, Nasser said.
The major disruption to oil supply at the Strait of Hormuz will have spillover effects not only on energy supply and markets, but also on the agriculture, aviation, and automotive sectors, among others, Aramco’s top executive added.
Aramco’s warning comes days after Qatar, the world’s second-largest LNG exporter, said that oil prices could soar to as much as $150 per barrel if the critical Strait of Hormuz remains off limits for tankers for another two to three weeks.
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Aramco has also reportedly begun reducing oil production at two fields as the disruption around the Strait of Hormuz starts to choke off crude exports from the Gulf.
Saudi Arabia has some capacity to re-direct exports to the Red Sea port of Yanbu to bypass the Strait of Hormuz using its east-west pipeline network. However, the pipeline volumes are a fraction of crude flows lost with Hormuz effectively closed.
On Tuesday, Iran warned that “not a litre” of oil will be exported from the Middle East until the United States and Israel stop bombing it. The warning comes on the heels of statements made by U.S. President Donald Trump that the war would be over “very soon”.
“We are the ones who will determine the end of the war,” a spokesman for the Islamic Revolutionary Guards Corps said in a statement today, as reported by Reuters.
By Tsvetana Paraskova for Oilprice.com
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