Aramco warns prolonged Hormuz closure would be a "catastrophe for the global economy"

"Global oil inventories at a five-year low"

Aramco increases westbound Red Sea loadings instead of the Gulf

Saudi Aramco of Saudi Arabia, the world’s largest oil exporter, said on the 10th (local time) that if the war with Iran continues to disrupt maritime shipments through the Strait of Hormuz, it would have catastrophic consequences for the global oil market.

Before the outbreak of war, more than 20% of the world’s oil passed through the Strait of Hormuz, a key maritime corridor, but since early last week most oil movements have been blocked. Iran’s Islamic Revolutionary Guard Corps said again that day that if US and Israeli attacks continue, it would "ensure not a single liter of oil can be shipped" from the Middle East.

Aramco CEO Amin Nasser said on an earnings conference call that day, "The longer the disruption (to oil shipments) lasts, the more severe the impact on the global economy will be." He also stressed that the situation is the biggest crisis facing the Middle East’s oil and gas industry.

The fallout from the war in the Middle East is hitting a broad range of sectors beyond energy transport. Nasser said the crisis has shocked the shipping and insurance industries and is also expected to have knock-on effects on aviation, agriculture, autos and other industries.

Brent crude, the international benchmark, surged the previous day to as high as $119 a barrel, the highest in three years, but is trading around $90 that day after US President Donald Trump said the war could end soon.

Trump warned that if Iran blocks Middle East oil exports, the US would take far stronger measures. He also said the US Navy could escort vessels to ensure safe passage in Gulf waters. However, with some naval ships deployed for strikes on Iran and missile intercept missions, the feasibility of such escorts remains uncertain.

Nasser said "global oil inventories are at their lowest level in five years," adding that resuming maritime traffic through the Strait of Hormuz is urgent.

Aramco is currently unable to load crude in the eastern Gulf region and is instead shipping Arab Light and Arab Extra Light crude from the Yanbu terminal on the Red Sea in the west via the East–West crude pipeline. He said Aramco is meeting most customer demand. He added that as routes shift, the pipeline is expected to reach its maximum capacity of 7 million barrels a day within the next few days.

Nasser added that a small fire caused by an attack last week on Aramco’s largest domestic refining facility, the Ras Tanura refinery, was quickly extinguished, and restart work is under way.

Meanwhile, Aramco said its annual adjusted net profit last year totaled $104.7 billion (about 154 trillion won). That was down 12% from the previous year, and the company said it delivered solid growth despite heightened oil-price volatility last year.

Fourth-quarter adjusted net profit came to $25.1 billion, slightly above the median market estimate of $24.8 billion compiled by the company. Aramco also announced it would launch its first-ever share buyback of up to $3 billion.

Kim Jeong-a, contributing reporter kja@hankyung.com