War in the Middle East could be a “disaster” for the global economy
11 March 05:03
Amin Nasser, CEO of state-owned energy company Saudi Aramco, warned of “catastrophic consequences” for the global economy if the war between the US and Iran drags on. This was reported by the Financial Times, according to "Komersant Ukrainian".
During a call regarding financial results, Nasser said that the company is working to rapidly increase exports through the port of Yanbu on the Red Sea. This should allow about 5 million barrels per day to enter the global market without passing through the Strait of Hormuz.
Saudi Arabia usually exports about 7 million barrels per day: only a small portion goes through the Red Sea, while most goes from the east coast to the Persian Gulf.
However, due to Iran’s threats to shipping, the Strait of Hormuz is largely closed, cutting off most of Saudi Arabia’s oil from the world market.
In total, the conflict has affected about 20% of global oil supplies: Iraq, Kuwait, and the United Arab Emirates are reducing production to varying degrees, risking a shortage of storage space.
Nasser warned that the conflict in the Middle East would have “catastrophic consequences” for the oil market if it continued for longer, and would also have a “radical” impact on the global economy.
His remarks, made during a quarterly earnings call, were the first public warning from the world’s largest oil company about the ongoing conflict, which, according to the text, erupted after US and Israeli strikes on Iran earlier this month.
These statements echo comments made last week by Qatar’s energy minister, who warned that a disruption in energy supplies could “bring down the world’s economies” as Gulf countries try to highlight the economic risks to the Trump administration.
Aramco is the world’s largest oil producer, accounting for about a tenth of global supply, so any disruptions to its operations are closely monitored by the markets.
