Aramco CEO warns of 2027 supply shock after $33.6 billion profit

Saudi Arabia’s state oil giant on Sunday reported a 26 percent year-over-year jump in adjusted net profit to $33.6 billion for the first quarter, but its chief executive warned that a lasting resolution to the Hormuz crisis is needed to avert a multi-year supply disruption. The warning came as the UAE, Kuwait, and commercial shipping in Qatari waters all reported separate drone attacks over the weekend, threatening a month-old ceasefire.

"Our East-West Pipeline has proven itself to be a critical supply artery, helping to mitigate the impact of the global energy shock," CEO Amin Nasser said in a statement. He warned, however, that if trade and shipping routes remain blocked for several more weeks, "the market may not return to normal until 2027."

The latest flare-up in the region saw the United Arab Emirates intercept two drones launched from Iran, while Kuwait’s military said it engaged several hostile drones in its airspace, according to state media reports on Sunday. Separately, the UK Maritime Trade Operations center reported a cargo vessel was struck by an "unknown projectile" and caught fire 23 nautical miles northeast of Doha, Qatar. Since April 13, the U.S. Navy has intercepted 58 commercial ships attempting to enter or leave Iranian ports, Central Command announced Saturday.

The Strait of Hormuz, a narrow waterway between Iran and Oman, is a critical chokepoint that handled about 20 percent of the world's oil supply before the conflict began. While some cargoes are finding alternative routes, the ongoing attacks and dual blockades by U.S. and Iranian forces have left around 1,600 ships stranded in the Persian Gulf, according to a New York Times report. In a potential sign of a breakthrough, a Qatari-operated liquefied natural gas carrier, the Al Kharaitiyat, successfully passed through the strait this weekend, the first such transit since the war began on February 28.

Gulf Nations Seek Alternatives as Attacks Continue

As tensions simmer, Gulf producers are scrambling to bypass the blockaded strait. Saudi Aramco’s East-West Pipeline, which transports crude to the Red Sea for export, was running at its full capacity of 7 million barrels per day during the first quarter, according to Nasser. This provided a critical outlet for customers affected by the shipping restrictions.

Despite the successful transit of the Qatari LNG tanker to Pakistan, which was confirmed by Iran's Fars News Agency as the first non-Iranian vessel authorized to pass, the security situation remains highly volatile. The drone attack on a commercial ship near Qatar, which caused a small fire but no casualties, highlights the persistent danger to any vessel operating in the region. Iran’s Revolutionary Guards Navy has repeatedly stated that any attack on its vessels would be met with a “heavy assault” on American ships and targets.

Broader Economic Shockwaves

The conflict's impact is rippling through global supply chains, extending far beyond crude oil and hitting consumers and industries worldwide. In India, the blockade has been cited as a key driver of rising fuel costs. State-run oil marketing companies recently hiked the price of a commercial LPG cylinder by ₹993, the third major increase since the war began, according to Livemint. The price of domestic cooking gas has also risen, adding to household expenses.

Beyond energy, experts are now warning of potential shortages in essential industrial materials. The war could trigger a scarcity of sulfuric acid, a critical component in manufacturing fertilizers, refining metals, and producing a vast range of chemicals, according to a recent report. This demonstrates how a localized military conflict can rapidly escalate into a global logistical crisis with far-reaching economic consequences.

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