Saudi Aramco CEO Warns: Oil Disruption Could Trigger a "Domino Effect" or Lead to "Catastrophic" Consequences

CITIC Finance APP learned that as the geopolitical tensions in the Middle East continue to escalate, Saudi Aramco CEO Amin Nasser warned that further disruptions to global energy supplies could have “catastrophic” consequences.

In a speech to analysts and investors on Tuesday morning, Nasser emphasized the danger of the current situation, stating that the Iran war is “the biggest crisis the oil and gas industry in the region has ever faced.”

Nasser said, “This disruption has not only triggered severe chain reactions in shipping and insurance industries but also caused intense domino effects in aviation, agriculture, automotive, and other sectors. The longer the disruption lasts, the more disastrous the consequences for the global oil market, and the greater the impact on the global economy.”

The Saudi Aramco CEO revealed that the company is increasing the volume of crude oil transported through the East-West Pipeline. The pipeline runs across Saudi Arabia directly to the Red Sea and is one of the two main pipelines bypassing the Strait of Hormuz. Nasser stated that the pipeline’s capacity is up to 7 million barrels per day, and Saudi Aramco expects to reach full capacity “within a few days.”

Nasser said that if Saudi Aramco is forced to reduce production to the 7 million barrels per day capacity of the East-West Pipeline, the company has the ability to “restore production to normal within days rather than weeks,” which could be a bullish signal for investors. Previously, the market had predicted that halts or reductions might take weeks or even months to recover.

International benchmark Brent crude futures and US WTI crude futures traded around $87.60 and $90 per barrel respectively on Tuesday. Earlier, after the US and Israel launched strikes on Iran, both major oil futures surged past $100 on Sunday evening and briefly soared to nearly $119. However, following US President Trump’s statement that he believes the conflict could end soon, the war premium was heavily unwound, and oil prices plummeted sharply on Monday.

However, relying solely on Trump’s remarks cannot resolve the serious physical bottleneck troubling the global energy market. The crucial Strait of Hormuz, which accounts for 20% of global oil flow, remains closed to traffic.

On Tuesday morning, the UAE announced that its Ras Laffan refinery, with a processing capacity of about 900,000 barrels per day, has suspended operations after an airstrike, exacerbating the shutdown trend of Middle Eastern refineries. Earlier this week, Bahrain also shut down its only Bapco oil refinery.

In terms of oil field production, shutdowns in Saudi Arabia, Iraq, Kuwait, and the UAE have resulted in a loss of about 6.7 million barrels per day, roughly 6% of global supply.

Meanwhile, the Trump administration signaled that the situation could further escalate. US Secretary of Defense Lloyd Austin stated in a speech on Tuesday morning that it would be “the most intense day of airstrikes so far.”