Aramco Warns of "Catastrophe" if Strait of Hormuz not Reopened

Saudi Aramco, the world’s largest oil exporter, has warned that “catastrophic consequences” could hit global oil markets if the Iran war continues to disrupt shipping through the Strait of Hormuz, Reuters reported.

The warning came as Aramco reported a 12% drop in annual profit, largely due to lower crude prices. (Photo: Ali Lajami Flickr) 

The disruption has already shaken the shipping and insurance industries and could trigger domino effects across aviation, agriculture, automotive and other sectors, Aramco CEO Amin Nasser said during an earnings call.

Global oil inventories are already at a five-year low, he added, meaning the crisis could accelerate the drawdown of existing supplies.

“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 also revealed that a small fire caused by last week’s attack on Aramco’s Ras Tanura refinery, the kingdom’s largest domestic refinery, was quickly extinguished and brought under control.

The facility is now in the process of restarting operations.

Iran’s Revolutionary Guards warned Tuesday they would not allow “one liter of oil” to be shipped from the Middle East if US and Israeli attacks continue.

In response, President Donald Trump warned that the United States would strike Iran “much harder” if it blocked oil exports from the vital energy-producing region.

The warning came as Aramco reported a 12% drop in annual profit, largely due to lower crude prices. The company also announced its first-ever share buyback program, authorizing repurchases of up to $3 billion in stock.