Aramco CEO says 1 billion barrels lost as crisis delays oil recovery to 2027

Saudi Aramco’s chief executive warned the global oil market may not normalize until 2027 if the Strait of Hormuz remains disrupted, a crisis that has already removed an estimated 1 billion barrels from supply over the past two months.

“If the Strait of Hormuz opens today, it will still take months for the market to rebalance, and if its opening is delayed by a few more weeks, then normalization will last into 2027,” CEO Amin Nasser said Monday during an earnings call, according to MarketWatch.

The warning came as Brent crude futures climbed 4.1% to $105.45 a barrel, while West Texas Intermediate rose 4.6% to $99.80. The disruption to the strait, which normally handles about 20 percent of the world's seaborne oil, has sent U.S. gasoline prices to a national average of $4.52 per gallon.

Nasser’s forecast challenges the market’s prevailing assumption that the energy shock is a short-term event. It raises the risk of sustained inflation that could derail corporate earnings and pressure a U.S. consumer already strained by rising tariffs and weakening confidence.

The warning overshadowed a strong quarter for the state-owned oil giant. Aramco reported a 26% increase in first-quarter adjusted net income to $33.6 billion, beating analyst forecasts. The company’s realized crude price was $76.90 a barrel, up sharply from $64.10 in the prior quarter. Despite the strong earnings, free cash flow of $18.6 billion was not enough to cover its $21.9 billion dividend payout.

Nasser credited the company’s foresight and infrastructure investments with limiting the operational damage. To bypass the blocked strait, Aramco shifted shipments to its East-West pipeline, which reached its maximum capacity of seven million barrels per day, delivering crude to the Red Sea. “While Aramco has been able to mitigate some of the impact... global energy system supplies remain constrained,” Nasser said.

AI Rally Masks Deepening Economic Cracks

The oil price shock is creating a dangerous divergence in the U.S. economy. While the S&P 500 and Nasdaq continue to hit all-time highs, driven by euphoria around artificial intelligence stocks like Nvidia (NASDAQ:NVDA), underlying consumer health is deteriorating.

The University of Michigan’s consumer sentiment index recently fell to a 75-year low, with households citing high energy costs and tariffs as primary concerns. That weakness has yet to show up in headline economic data like the 4.3% unemployment rate, which President Donald Trump has highlighted as a sign of strength.

However, if oil prices remain elevated into 2027 as Nasser warned, the pressure on household budgets could become severe. Sustained high gasoline prices act as a tax on consumers, reducing discretionary spending. This could first hit retailers and restaurants before spreading to the broader economy, potentially slowing earnings growth even for the technology giants that have carried the market higher.

For now, investors are betting the AI boom can power through the energy shock. But if consumer spending falters, not even the powerful demand for AI chips can carry the market indefinitely. Smart investors will be watching consumer spending data and corporate earnings guidance for signs that the oil crisis is finally starting to bite.

This article is for informational purposes only and does not constitute investment advice.