Saudi Aramco's chief executive has warned that the ongoing US-Israeli war with Iran risks producing catastrophic consequences for global energy markets, as the effective closure of the Strait of Hormuz continues to strangle one of the world's most critical oil shipping routes.
Speaking publicly on Monday, the Aramco CEO described the crisis as "by far the biggest" the region's oil and gas industry has ever faced, a characterisation that underscored the severity with which the kingdom's state oil company views the conflict's economic fallout.
The Strait of Hormuz, through which a significant share of the world's seaborne crude passes, has been rendered effectively impassable for commercial tankers since the outbreak of hostilities, forcing producers across the Gulf to seek alternative routes or reduce output.
Aramco said it expects to be able to export approximately 70% of its usual crude volumes by rerouting shipments through the kingdom's East-West pipeline toward Red Sea terminals, and that full production capacity could be restored within days once the strait reopened. The company is also tapping crude held in storage to supplement supplies offered on the spot market, according to reporting by Bloomberg, as Saudi Arabia moves to cushion the impact on customers.
Despite that partial workaround, the CEO made clear that the remaining disruption was far from trivial. Even at 70% of normal export capacity, the consequences for the world economy would be "drastic" if the situation persisted, he said, according to the Guardian.
The executive was unenthusiastic about proposals for the US Navy to escort commercial tankers through the strait, a sign that Aramco views a diplomatic or military resolution to the blockade, rather than convoy arrangements, as the only durable solution. MarketWatch reported that his comments reflected deep scepticism that naval escorts could substitute for an open waterway.
Reuters and the Financial Times reported that Aramco sees the stakes as high enough to warrant an urgent international response, with the company's leadership pressing for the strait to reopen as quickly as possible.
Bloomberg reported separately that Gulf oil producers more broadly have been deepening output cuts as the disruption bites, with multiple Middle Eastern countries reducing daily production. Saudi Arabia has simultaneously been pushing its East-West pipeline toward capacity in response to the Hormuz disruption, according to the Wall Street Journal.
Crude prices have remained volatile throughout the crisis. Forbes noted that markets have yet to settle on a stable price level, reflecting uncertainty about both the conflict's duration and the global economy's capacity to absorb a sustained reduction in Gulf oil flows.
Aramco did not provide a specific timeline for when it expected the strait to reopen, and the CEO's remarks offered little optimism that a near-term resolution was imminent. With the world's largest oil exporter warning of catastrophe and Gulf producers already cutting output, the pressure on diplomats and military planners to find a path to de-escalation is growing by the day.
