Saudi oil giant warning that closure of the Strait of Hormuz is catastrophic.
Saudi Arabia’s Aramco CEO Amin Nasser says that the disruption of the Strait of Hormuz promises to have drastic domino effects on aviation, agriculture, automotive and other industries. This statement comes from Aramco’s earnings call, where Nasser described the situation as the “biggest crisis” the region’s oil and gas industry has faced, amid an escalating Iran war that has largely blocked oil shipments through the strait. If the crisis continues, global oil reserves will deplete at a faster rate. He emphasized that prolonged closure could lead to catastrophic effects on global oil markets and the economy, with ripple effects beyond shipping into various sectors.
Aramco is mitigating this by maximizing its East-West pipeline, which bypasses the strait and runs across Saudi Arabia to the Red Sea, but it expects to hit full capacity (up to 7 million barrels per day) within days. If forced to cut production, the company claims it could restore output quickly once the strait reopens. The conflict involves threats between the US (under Trump) and Iran over the oil blockade, severely impacting global spare capacity concentrated in the Gulf. This reflects broader concerns in energy markets, with the strait being a critical chokepoint for about 20% of global oil trade.
Fourth quarter 2025 Saudi Aramco’s liquid production was 11.1 million barrels per day, 1 million barrels per day higher than the fourth quarter of 2024. During the last year, Aramco delivered four world-class upstream projects, including Marjan and Berri crude oil increments, Karan gas plant, and Jafurah Phase One.
Despite geopolitical tension and tariffs, the global economy in 2025 grew faster than most expected, up 3.1% year-on-year. 2025 demand was over 106 million barrels a day, another record high, and we continue to see upward revision in estimates. Notably, independent demand estimates since April last year for both 2024 and 2025 have been revised up by an average of 0.7 and 0.5 million barrels a day respectively, and we expect this trend to continue. 2026 demand growth is expected to be 1.1-1.4 million barrels per day based on various forecasters, with S&P estimating it to be 107.3 million barrels per day.
/Saudi Aramco/