The narrow shipping route—one of the most critical energy corridors in the world—normally carries about 20% of global oil supplies each day. But escalating hostilities and threats from Iran’s Revolutionary Guards have significantly disrupted tanker traffic, raising fears that a prolonged standoff could severely strain oil supply chains worldwide.
Speaking during an earnings call on Tuesday, Aramco CEO Amin Nasser described the situation as unprecedented for the region’s energy industry.
“There would be catastrophic consequences for the world’s oil markets, and the longer the disruption goes on, the more drastic the consequences for the global economy,” Nasser said.
He noted that although the oil industry has weathered supply disruptions before, the scale and strategic importance of the current crisis make it one of the most serious challenges the region’s oil and gas sector has faced.
Ripple Effects Beyond Energy
The crisis is already reverberating far beyond the oil market. According to Nasser, sectors including shipping, insurance, aviation, agriculture, and automotive manufacturing could feel the impact as higher fuel costs and logistical disruptions ripple across global supply chains.
Oil prices reacted sharply at the start of the week. The global benchmark Brent Crude surged to nearly $120 per barrel, its highest level in more than three years, before retreating to around $92 after comments from Donald Trump suggesting the conflict might end soon.
Trump, however, warned that the United States would respond forcefully if Iran follows through on threats to halt oil exports from the region. He also indicated that the United States Navy could escort commercial vessels through the Gulf to ensure safe passage.
Yet questions remain about whether such an operation could be sustained at the scale required, particularly as U.S. naval assets are already involved in missile defense and strike operations linked to the conflict.
Exports Halted Through the Gulf
For now, Aramco says it is unable to export crude directly from Gulf terminals, as tankers cannot safely load cargo in the affected areas. Instead, the company is temporarily meeting most customer commitments by tapping into stored oil supplies and redirecting shipments through alternative routes.
One key alternative is Saudi Arabia’s East–West pipeline, which transports crude across the kingdom to the Red Sea port of Yanbu. The pipeline’s capacity—expanded over the years—is expected to reach about 7 million barrels per day as customers reroute shipments away from the Gulf.
Even with that workaround, Nasser warned that disruptions could still remove roughly 350 million barrels of oil from global markets.
Compounding the issue is the fact that global oil inventories are already at five-year lows, meaning stockpiles could be depleted quickly if the standoff continues.
Regional Infrastructure Under Pressure
Aramco also confirmed that a small fire at its major Ras Tanura refinery—Saudi Arabia’s largest—was triggered by an attack last week. The blaze was quickly contained, and the facility is currently in the process of restarting operations.
Despite the geopolitical turmoil, the company released its latest financial results, reporting a 12% drop in annual profit, largely attributed to lower crude prices earlier in the year. Aramco also announced plans for its first-ever share buyback, valued at up to $3 billion, aimed at returning value to shareholders.
A Fragile Energy Balance
Energy analysts say the ongoing crisis underscores the world’s heavy dependence on Middle Eastern oil flows—particularly through the Strait of Hormuz. With much of the world’s spare oil production capacity located in the Gulf, any prolonged disruption could quickly tighten supply and push prices higher.
For now, industry leaders say the most effective solution remains a diplomatic one. Without an end to the conflict, the world’s most important oil artery could remain partially shut—leaving global markets on edge.