Nasser says current energy supply shock largest ever

Amin Nasser, CEO of Saudi Aramco

Amin Nasser, CEO of Saudi Aramco, said continued closure of the Strait of Hormuz could result in the loss of around 100 million barrels of oil per week from the market, warning that rebalancing global oil markets could extend into 2027 if current disruptions persist for several more weeks.

Nasser described the energy supply shock that began in Q1 2026 as the most severe the world has ever experienced.

He added that the company produced 12.6 million barrels of oil equivalent per day during the first quarter.

Speaking after the company’s Q1 2026 results announcement, Nasser said current supply disruptions have already resulted in the loss of nearly 1 billion barrels of oil, affecting key sectors including petrochemicals, agriculture, semiconductors and transport.

He added that part of the supply shortfall was offset through Aramco exports via the East-West pipeline, alongside drawdowns from global strategic reserves, although global inventory levels do not fully reflect the extent of actual market tightness due to large volumes tied up in pipelines and minimum operating inventories.

Nasser said Aramco maintained supply reliability through long-term infrastructure investments and operational flexibility, noting that the East-West pipeline enabled the company to raise flows to 7 million barrels per day within just eight days.

He added that the company also benefited from investments in gas storage since 2018, alongside the iktva program, which raised local content to around 70%, noting that 99% of materials used in repair operations during the current crisis were sourced locally.

Nasser said Aramco is currently developing additional emergency plans to strengthen operational resilience, while studying new measures to enhance future network and infrastructure reliability.

He added that draws from onshore inventories are accelerating, particularly for gasoline and jet fuel, as markets head into the summer travel and driving season, increasing pressure on supplies.

Nasser said the market is witnessing a clear disconnect between futures and physical markets, reflected in higher refining margins and strong refined product prices due to tight physical supplies.

He added that continued supply disruptions for several more weeks would prolong the market rebalancing period, noting that rebuilding commercial and strategic inventories would become necessary once normal shipping resumes.

Nasser said shipping traffic through the Strait of Hormuz has dropped sharply from around 70 tankers per day to just two to five, while more than 600 vessels are currently inside the region and around 240 vessels are waiting outside the strait, causing major disruptions to global supply chains.

He added that repositioning tankers and restarting suspended facilities in the region would take several months even after the strait reopens, particularly as some facilities require technical work and gradual restart procedures following prolonged shutdowns.

Nasser said forecasts point to demand growth of around 700,000 to 900,000 barrels per day in 2026, adding that normalization of trade and shipping would support a very strong rebound in demand growth.

He also noted that the Aramco's In-Kingdom Total Value Add (iktva) program, which raised local content to 70%, played a critical role, as around 99% of materials needed for repair operations were sourced domestically. Without local availability, recovery operations could have been delayed for months or even years.

Separately, CFO Ziad Al-Murshed said refining and petrochemical margins improved during Q1 2026, with refining margins rising 14% and petrochemical margins up 7%. He added that Aramco expects refining sector performance to remain strong in Q2 amid global shortages of refined products.

Al-Murshed added that Aramco is currently prioritizing exports of refined products over crude oil, noting that stronger refined product margins have shifted pricing power toward products rather than crude during the current period.

He also said Aramco’s reserve base stands at around 250 billion barrels of oil equivalent. With peer reserves declining, Aramco’s reserves now equal about five times those of international oil companies combined, up from 3.5 times in 2018.

Al-Murshed added that more than 60% of Aramco’s 2025 operating cash flow was available for shareholder distributions and external investments, the highest liquidity ratio among peers.

He said the company continues to expand its funding sources alongside existing instruments, including bonds, sukuk, and commercial paper, to strengthen financial flexibility.

He added that the company’s western-region refineries are operating at high utilization rates to meet both domestic demand and export needs, while utilization at some eastern-region refineries was reduced due to difficulties exporting products through the Gulf.

Al-Murshed also said Aramco generated more than $11 billion in added value from artificial intelligence (AI) applications since 2023, including around $5 billion during 2025 alone, noting that AI technologies helped the company monitor operations and respond rapidly to events by analyzing billions of data points daily.