The world’s largest oil producer has now said publicly what energy analysts have been saying privately since the Strait of Hormuz effectively closed: the supply buffer is nearly gone, and no combination of workarounds can fully replace what is being lost.
Speaking on Aramco’s quarterly earnings call last Tuesday, chief executive Amin Nasser described the current crisis as “by far the biggest the region’s oil and gas industry has faced,” adding that global inventories are already at a five-year low and that a prolonged disruption would accelerate drawdowns at a rate the market cannot absorb.
The warning carries weight precisely because Aramco does not typically speak in these terms. It is a company whose public statements are calibrated to project stability. When its CEO uses the word “catastrophic,” the market listens.
What is Actually Broken
Shut-ins across Saudi Arabia, Iraq, Kuwait, and the UAE now total roughly 6.7 million barrels per day of lost production, equivalent to around six per cent of global supply. Saudi Arabia alone is cutting output by up to 2.5 million barrels per day. Aramco’s Ras Tanura refinery, its largest domestically, was hit by a drone strike and taken offline, though Nasser said it is being restarted.
The UAE’s Ruwais refinery, which can process 900,000 barrels per day, was also taken offline as a precaution. Bahrain shut its only refinery. Iran’s Revolutionary Guards declared they would not allow “one litre of oil” to be shipped from the region if US and Israeli attacks continued, and Brent crude scraped $120 a barrel on Monday, its highest level since 2022, before easing slightly after Trump said the conflict might be heading toward de-escalation.
The IEA responded on Wednesday by agreeing to release 400 million barrels of emergency reserves, the largest such action in its history.
The U.S. Strategic Petroleum Reserve, which can hold up to 714 million barrels stored in salt caverns in Texas and Louisiana, has not yet been tapped.
The Pipeline is Not Enough
Aramco’s main response to the Hormuz closure has been to reroute exports through its East-West pipeline, which runs from the Abqaiq processing facility near the Persian Gulf to the port of Yanbu on the Red Sea, bypassing the strait entirely. The pipeline is ramping up to its maximum capacity of seven million barrels per day, with eight supertankers already loaded from the Yanbu terminal this month, putting shipments on pace for a record.
Pakistan has requested cargoes from Yanbu. Aramco is prioritising its Arab Light and Extra Light grades through the pipeline and suspending heavier grades it cannot move efficiently.
Even so, Nasser was explicit that these measures cannot replace normal export volumes: “Even with our ability to export through the western region, you’re talking about close to 350 million barrels of disruptions that will come off the market,” he said. The pipeline was always designed as a contingency, not a substitute. It has more than doubled its original capacity through infrastructure upgrades, but it was built for emergencies measured in days, not weeks.
Who is Gaining and Who is Not
The disruption is not landing evenly. ExxonMobil is up approximately 24% year to date as integrated oil majors benefit directly from elevated prices. The Global X Defence Tech ETF has returned over 70% in the past eleven months. For everyone else, the picture is considerably worse. The disruption has caused a severe chain reaction across not only shipping and insurance but also aviation, agriculture, and automotive industries.
Airlines face fuel cost surges on routes that cannot easily be rerouted around Gulf pricing. Fertiliser producers dependent on Gulf gas face input shortages. Aramco itself announced a first-ever $3 billion share buyback this week alongside its earnings, a gesture designed to reassure investors while its operational situation is anything but reassuring.
Trump has promised US Navy escorts for oil tankers navigating between the Persian Gulf and global oceans, a proposal that Nasser addressed diplomatically, saying Aramco would “support any actions that help deliver our products to our customers.” Another senior Gulf energy official was blunter: stopping the war, he said, was the only real solution.
Keep up with Daily Euro Times for more updates!
Read also:
Troubled Waters: Return of Piracy and Somalia’s Governance
Adapting to New Realities: Sweden’s Military Strategy In Flux
Dubai After Iran: Young Professionals Relocate for Speed, Not Sunshine
