The largest oil exporter globally issued a grave warning about the potential disastrous outcomes should the conflict in Iran persist and disrupt the Strait of Hormuz’s shipping routes.
Due to the disruptions caused by the Iran conflict, the transportation of oil through the Strait of Hormuz, typically accounting for around 20% of the world’s daily oil supply, has been significantly impeded.
Iran’s Revolutionary Guards have declared their intention to prevent any oil shipments from the Middle East if attacks from the US and Israel continue.
Amin Nasser, the CEO of Saudi Arabia’s state oil company Aramco, emphasized the severe impact on the global oil markets and the economy if the disruption in the region persists, stating that it is the most significant crisis the oil and gas industry in the area has ever faced.
Recent attacks on commercial ships in the key shipping route have not only disrupted the shipping and insurance sectors but also pose potential cascading effects on various industries like aviation, agriculture, and automotive.
The price of Global Brent crude, which surged to over $120 a barrel recently, has slightly decreased to around $92 amid speculations that the International Energy Agency might recommend releasing oil from strategic reserves, possibly amounting to 400 million barrels, to alleviate the pressure on oil prices.
US President Donald Trump has warned of harsher actions against Iran if it obstructs energy exports from the region and suggested that the US Navy could provide escort services to ensure safe passage for ships in the Gulf.
Regarding the possibility of US Navy escorts, Nasser mentioned the substantial volumes involved and highlighted that Aramco’s customers bear the delivery risks, expressing support for measures facilitating the transportation of their products to global markets.
Nasser pointed out the significant reduction in global oil inventories and emphasized the urgent need for shipping to resume in the strait to prevent faster drawdowns.
Currently, Aramco is not exporting oil from the Gulf due to the inability to load cargoes there. However, the company is meeting its customers’ demands by accessing global inventories, although the exact output figures are not disclosed.