Aramco warns that disruptions to the Strait of Hormuz could trigger a global oil market crisis
JAKARTA — Conflict involving Iran has the potential to trigger major impacts on global energy markets.
Amin Nasser, chief executive officer of Saudi Arabia’s national oil company Saudi Aramco, has warned that the war ongoing in the Middle Eastern region could create very serious consequences for the global oil market.
During a company performance presentation, Nasser stated that the conflict has triggered cascading reactions that extend beyond the energy sector to various other industries dependent on oil supply stability.
He added that the conflict has triggered severe cascading reactions and drastic domino effects, which have spread from the shipping sector to various other economic sectors.
According to Nasser, the impacts can be felt by various industries, including aviation, agriculture, automotive, and other sectors that depend on the stability of global logistics and energy.
“There will be catastrophic consequences for the global oil market. The longer these disruptions continue, the more drastic the consequences for the global economy,” said Nasser, as quoted by CNBC.
“Although we have faced disruptions in the past, this current crisis is the largest crisis the oil and gas industry has faced in this region,” he said.
Geopolitical tensions escalated following Iranian drone and missile attacks on Gulf nations in response to attacks by the United States and Israel.
One of Aramco’s important facilities, the Ras Tanura refinery in Saudi Arabia, was reported to have been struck by projectiles last week.
Oil prices spiked sharply amid concerns over global supply disruptions. However, prices subsequently fell after US President Donald Trump stated that Washington would respond more forcefully if Iran attempts to halt the flow of oil through the Strait of Hormuz.
The Strait of Hormuz is a strategically critical global energy shipping route. Approximately 20 per cent of global oil supplies typically pass through this route daily.
However, the security situation in the region has now raised fresh concerns for shipping companies and energy exporters.
“As long as the situation is unsafe, I believe all tanker ships, all maritime navigation, must be extremely cautious,” said Baghaei.
Iran has also warned that oil exports from the Middle East could be disrupted if attacks against the country continue.
The Iranian Revolutionary Guards have even stated that they will not allow “a single litre of oil” to be shipped from the Middle East if US and Israeli attacks continue.
He warned that the ongoing geopolitical crisis could accelerate a decline in global oil stocks.