Saudi Aramco, the world’s largest oil exporter, warned Tuesday of “catastrophic consequences” for global oil markets should the ongoing conflict in Iran continue to disrupt shipping through the Strait of Hormuz. The assessment came during an earnings call as the company reported a 12 percent drop in annual profit, attributing the decline primarily to lower crude prices.
Aramco President and Chief Executive Amin H. Nasser stated the disruption had already impacted shipping and insurance sectors and could trigger wider effects across industries including aviation, agriculture, and automotive. He emphasized that global oil inventories were currently at a five-year low, meaning any prolonged disruption would rapidly deplete existing reserves.
“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, according to a statement released by the company. Aramco is actively rerouting crude exports through the East-West Pipeline, which has a capacity of five million barrels per day, to its Red Sea terminal. The company confirmed the pipeline is currently handling seven million barrels per day, having temporarily converted natural gas liquid pipelines to accommodate the increased volume.
The warning followed a statement from Iran’s Revolutionary Guards on Tuesday, declaring they would not permit “one litre of oil” to be shipped from the Middle East should attacks from the United States and Israel persist. This prompted a response from U.S. President Donald Trump, who cautioned that the U.S. Would respond with greater force if Iran were to block exports from the region.
Aramco also disclosed that a minor fire broke out at its Ras Tanura refinery, the largest in Saudi Arabia, following an attack last week. The fire was quickly extinguished, and the refinery is currently undergoing restart procedures. Despite the challenges, Nasser affirmed Aramco was “doing our best to meet the majority of our customers’ requirements under the current circumstances.”
Alongside the profit decline, Aramco announced a $3 billion share repurchase program, marking its first-ever buyback initiative. The company also raised its quarterly base dividend by 3.5 percent to $21.9 billion, representing the fourth consecutive annual increase. Net income attributable to shareholders fell by 11.6 percent annually to 348.04 billion Saudi riyals ($92.81 billion), partially offset by lower operating costs and taxes.
The situation remains unresolved, with no immediate indication of a de-escalation in tensions or a resumption of normal shipping activity through the Strait of Hormuz.
