Aramco CEO says 6.7 million barrels a day lost as Hormuz shutdown surpasses every prior Gulf energy crisis

Saudi Arabian Oil Company (Tadawul: 2222), the world’s largest oil exporter by volume, has issued its starkest public warning yet about the stability of global energy supply, with chief executive Amin Nasser describing the ongoing Iran war and its chokehold on the Strait of Hormuz as “by far the biggest crisis the region’s oil and gas industry has faced.” Speaking on the company’s 2025 full-year earnings call on Tuesday, Nasser warned that the disruption had already triggered a “severe chain reaction” across shipping, insurance, aviation, agriculture, and the automotive supply chain, with consequences that would compound the longer the conflict persisted. Saudi Aramco reported full-year net income of $93.38 billion, down from $106.24 billion in 2024, a 12 percent decline driven primarily by softer crude prices throughout last year, even before the current supply shock fully registers on the income statement. In his first public comments since the conflict effectively choked Middle East energy shipments, Nasser confirmed that Saudi Aramco can divert some crude volumes through an alternative route bypassing the Strait of Hormuz, but acknowledged the company cannot export its normal quantities because of pipeline capacity constraints.

How is the Strait of Hormuz closure reshaping the global oil supply outlook and what does it mean for energy security?

The Strait of Hormuz normally carries roughly 20 percent of global oil supplies daily, and its effective closure following the Iran war has removed a volume of crude from world markets that no alternative routing or inventory drawdown can fully replace in the near term. Shut-ins across Saudi Arabia, Iraq, Kuwait, and the UAE now total roughly 6.7 million barrels per day of lost production, equivalent to approximately six percent of global supply. That figure alone would rank among the most severe supply disruptions in modern oil market history, eclipsing the impact of the 1973 Arab oil embargo in terms of raw volume removed from available supply chains.

The oil flow disruption is accelerating the pace of drawdowns at global inventories, which are already at a five-year low. That context materially sharpens the risk. In prior disruption cycles, such as the 2019 Abqaiq attack or the early-2020 demand collapse, markets could absorb shocks against a backdrop of adequate buffer stocks. That cushion no longer exists. Nasser noted that most of the world’s spare production capacity sits precisely in the affected region, compounding the asymmetry between supply risk and available mitigation.

Qatar, the world’s second-largest LNG exporter, has separately warned that oil prices could reach as high as $150 per barrel if the Strait of Hormuz remains blocked for another two to three weeks. Whether that ceiling is reached depends heavily on the duration of the conflict, but the directional signal from multiple Gulf producers is now aligned: the longer this runs, the more structurally damaging it becomes for global energy costs and the industrial supply chains that depend on them.

What contingency options does Saudi Aramco have to reroute exports around a closed Strait of Hormuz?

Saudi Aramco is leveraging its East-West pipeline and spare capacity to mitigate immediate supply shocks, with the pipeline offering a capacity of up to 7 million barrels per day to route crude to the Red Sea port of Yanbu. Eight supertankers have loaded from Red Sea facilities this month, putting shipments on pace for a record according to tanker tracking data, with Pakistan among the countries that have requested cargoes be dispatched from the Yanbu terminal.

However, the pipeline option is a partial fix, not a solution. If Saudi Aramco were forced to reduce production down to the 7 million barrels per day that can flow through the East-West pipeline, Nasser said the company should be able to bring production back to normal levels “in days and not weeks” once the crisis resolves. That statement carries meaningful signaling value for energy markets anxious about the length of any post-conflict recovery period. But the qualifier is critical: it only applies once the conflict ends and the strait reopens. Until that point, the physical bottleneck remains absolute.

Saudi Aramco also confirmed it maintains 2 million barrels per day of spare capacity and flexibility across its global storage network, with Nasser saying the company is meeting the majority of its customers’ requirements by drawing on domestic reserves and international storage hubs. That inventory-based bridging strategy buys time but is explicitly finite. “Now, that cannot be used for an extended period of time, but for the time being, we are capitalizing on it,” Nasser told analysts.

How has the Iran war impacted Saudi Aramco’s core infrastructure and what are the downstream risks?

Iran has fired at energy installations across the Gulf, including Saudi Aramco’s sprawling Ras Tanura facility, which halted some operations. The massive complex on the Gulf coast is home to one of the Middle East’s largest refineries and is a cornerstone of the Saudi energy sector. Saudi oil fields have also been targeted in Iran’s reprisal attacks.

The regional infrastructure damage extends well beyond Saudi Arabia. The United Arab Emirates announced that its Ruwais refinery, which can process around 900,000 barrels per day, was taken offline as a precaution after airstrikes. Earlier in the week, Bahrain shut down its Bapco Energies refinery, the country’s only such facility. Energy producers in Qatar and Kuwait also made force majeure declarations, a formal signal that events beyond their control may prevent them from fulfilling existing contracts.

Saudi Aramco also reported an impairment charge of 14.6 billion riyals on certain domestic and international downstream facilities due to revised cash flow projections, and an additional write-down of 4.45 billion riyals primarily related to the closure of an international downstream facility. While these charges predate the current conflict in their accounting recognition, they illustrate that even before the war intensified, Saudi Aramco was managing materially changed downstream economics. The conflict layered on top of an already-pressured earnings structure.

What does Saudi Aramco’s 2025 earnings performance reveal about financial resilience going into the crisis?

Against this geopolitical backdrop, Saudi Aramco’s full-year 2025 financial results delivered a mixed but fundamentally resilient read. Net income for 2025 reached $93.4 billion, below a consensus estimate of $95.6 billion, with fourth-quarter net profit falling 20.5 percent to nearly $17.8 billion on higher operating costs, marking the company’s 12th consecutive quarter of year-on-year profit decline. Adjusted net income, stripping out exceptional items, came in at $104.65 billion for 2025, compared with $110.29 billion in 2024, a slide of 5.1 percent.

Saudi Aramco generated $136.2 billion in operating cash flow last year, driven by steady production and strong downstream results. Capital investments totaled $52.2 billion, in line with company guidance and slightly below 2024 levels. That operating cash flow figure matters enormously in the current crisis context. Saudi Aramco enters the conflict period with a formidable liquidity and balance sheet position, giving it considerably more latitude to absorb revenue disruption than any competitor could.

Total shareholder distributions for the year reached $85.5 billion, as the company continued to prioritize payouts despite easing crude prices. Saudi Aramco also announced a share buyback program of up to $3 billion over 18 months, its first-ever buyback program. The buyback announcement, modest relative to the company’s scale, signals board-level confidence in the underlying business even as the geopolitical environment deteriorates sharply. It also provides a technical floor for the share price during a period of elevated uncertainty.

Global oil demand is expected to reach a record high of 107.3 million barrels per day in 2026, increasing by 1.1 million barrels per day primarily driven by transport fuels and petrochemicals, Nasser said, noting that incremental demand from the first to third quarter will keep the market tightly balanced. A tightly balanced demand-supply equation colliding with a major supply shock is, by definition, the setup for sustained price dislocation.

How are oil prices and Saudi Aramco shares responding to the Hormuz crisis and what does market behavior signal?

Brent crude and West Texas Intermediate were trading at roughly $87.60 and $90 per barrel respectively on Tuesday. Both benchmarks opened above $100 following US-Israeli strikes on Iran over the weekend, surged toward $119 per barrel, before retreating sharply on Monday when President Trump indicated the conflict could end soon. The violent intraday swings reflect a market caught between two contradictory signals: the physical reality of a closed Strait of Hormuz versus the diplomatic hope of a fast political resolution.

Saudi Aramco shares on the Tadawul were trading at 27.12 SAR as of March 9, 2026, near the top of their 52-week range of 23.04 to 27.40 SAR. The stock has appreciated sharply from its 52-week lows, reflecting both the earnings recovery narrative from earlier in the year and, more recently, the war premium embedded in all Gulf energy equities. Saudi Aramco’s market capitalization stands at approximately $1.745 trillion as of March 2026, retaining its position among the world’s most valuable listed companies.

The market reaction is analytically coherent up to a point. Higher oil prices benefit Saudi Aramco’s upstream revenue per barrel. But prolonged infrastructure damage at Ras Tanura and reduced export volumes directly compress total earnings. The net effect is ambiguous, and the stock’s positioning near 52-week highs suggests equity markets are currently pricing in a relatively swift resolution rather than a prolonged disruption. If that assumption proves incorrect, the downside repricing could be significant.

What are the geopolitical variables that will determine how the oil market crisis resolves?

Iran warned on Tuesday that “not a litre” of oil will be exported from the Middle East until the United States and Israel stop bombing it. The warning was accompanied by a statement from the Islamic Revolutionary Guards Corps that Iran would determine the end of the war. That posture, if sustained, closes the diplomatic off-ramp that markets spent Monday trading. Trump warned that the United States would hit Iran much harder if it blocked exports from the vital energy-producing region, and separately floated the idea of US Navy escorts for tankers in the Gulf. However, the Navy’s capacity to perform that function at scale remains unclear, with vessels already engaged in strike missions and missile defense operations.

Saudi Aramco has also raised its main crude grade price for Asian buyers in April by the most since August 2022, reflecting the new physical supply reality. That pricing action is as clear a signal as any executive statement: Aramco is formalizing the war premium into its commercial terms, which will filter directly into Asian manufacturing costs, inflationary pressure, and central bank calculus across import-dependent economies.

Key takeaways: what does the Aramco earnings call and Hormuz crisis mean for energy markets, investors, and the global economy?

• Saudi Aramco CEO Amin Nasser has issued the company’s most explicit public warning yet, describing the Strait of Hormuz disruption as the “biggest crisis” in the region’s oil and gas industry history, with catastrophic consequences threatened if the closure persists.
• Approximately 6.7 million barrels per day of Gulf production has been shut in across Saudi Arabia, Iraq, Kuwait, and the UAE, representing roughly six percent of global oil supply and far exceeding any recent historical precedent.
• Global oil inventories entering this crisis were already at five-year lows, removing the primary buffer that absorbed past supply disruptions and amplifying the risk of sustained price dislocation.
• Saudi Aramco’s East-West pipeline to Yanbu provides contingency routing capacity of up to 7 million barrels per day, but cannot replace total pre-war export volumes, making inventory drawdowns a necessary bridging tool with an explicitly finite duration.
• Full-year 2025 net income fell 12 percent to $93.4 billion on softer crude prices, but $136.2 billion in operating cash flow demonstrates balance sheet depth that provides significant resilience to near-term revenue disruption.
• Saudi Aramco’s first-ever share buyback program, at up to $3 billion over 18 months, signals board-level confidence in the business while providing a technical floor for the stock during the conflict period.
• Aramco shares near the 52-week high of 27.40 SAR imply equity markets are pricing in a short-lived conflict. A prolonged disruption scenario is not yet reflected in valuations, creating asymmetric downside risk if diplomatic resolution stalls.
• Saudi Aramco has raised April crude prices for Asian buyers by the most since August 2022, formally embedding the war premium into commercial terms and accelerating inflationary transmission across import-dependent Asian economies.
• Qatar has warned of potential $150 per barrel oil prices if the Hormuz closure extends by two to three weeks, a scenario that would materially reshape global monetary policy trajectories and trigger demand destruction across industrial sectors.
• The Iran-US-Israel conflict dynamic, with Iran’s IRGC insisting it controls the war’s end and the US Secretary of Defense signaling further escalation, means the energy market crisis has no reliable near-term resolution mechanism beyond a negotiated political settlement.