Hormuz Closure Threatens Global Oil Supply, Aramco Projects Market Recovery Into 2027

The shutdown of the Strait of Hormuz has removed an estimated 100 million barrels of oil from global supply each week. Saudi Aramco reports that the market has already lost more than 1 billion barrels, with a net shortfall of roughly 880 million barrels after accounting for pipeline redirection and strategic-reserve releases.

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Since early March, Iranian forces have effectively sealed the narrow sea lane that carries about 20 percent of world oil supplies. The blockade follows the escalation of the Iran-Saudi war, now in its third month, and has prevented normal tanker traffic through the strait.

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Aramco rerouted crude from its eastern fields through the east-west Petroline to the Red Sea port of Yanbu, achieving a flow of 7 million barrels per day. The pipeline now supports 60-70 percent of the company’s crude export volume. Aramco’s maximum sustainable capacity remains 12 million barrels per day, and the firm can restore that level within three weeks if required. Production fell from about 10 million barrels per day pre-war to roughly 7.4 million barrels per day in March-April. Refineries at Ras Tanura, SAMREF, and the SATORP joint venture are operating at or near capacity after earlier damage.

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• Weekly loss: ~100 million barrels

Bloomberg

• Cumulative loss: >1 billion barrels (net loss ~880 million)

Bloomberg

• Pipeline capacity: 7 million bpd (current flow)

The Straits Times

• Yanbu export capacity: 5 million bpd (handling 60-70 % of crude exports)

Bloomberg

• Refined product exports: ~900 000 bpd via western terminals

Reuters

• Global spare capacity: Primarily located in the Persian Gulf

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• Tanker fleet: >600 vessels stuck in the Gulf; ~240 waiting outside Hormuz

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Oil prices have risen above $100 per barrel, reflecting the supply gap and depleted inventories. Analysts warn that continued shortages could suppress global economic growth and heighten inflationary pressures, especially as gasoline and jet-fuel stocks approach critically low levels ahead of the summer travel season.

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Amin Nasser told analysts that prolonged disruptions will extend market rebalancing into 2027 and that the pipeline serves as a “critical lifeline.” He emphasized that even an immediate reopening of Hormuz would require months for the market to stabilize. U.S. President Donald Trump later described the ceasefire negotiations with Tehran as “on life support,” indicating no imminent diplomatic resolution.

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Industry analysts highlighted the market’s reliance on spare capacity concentrated in the Persian Gulf, noting that limited investment in production outside the region leaves the global supply chain vulnerable to such blockades.

Aramco sees 100 million-barrel oil loss each week Hormuz is shut

Sources differ on the exact number of stranded tankers (600 versus 240) and on total lost volumes (over 1 billion barrels versus a net loss of 880 million barrels). The precise share of crude redirected through the pipeline is reported as both 60-70 percent and “about 70 percent.” No independent verification of these figures is provided.

Bloomberg

• “The longer the supply disruptions continue, even for another few more weeks, it is going to take much longer for oil market to rebalance and stabilize,” — Amin Nasser, CEO, Saudi Aramco

Bloomberg

• “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,” — Amin Nasser, CEO, Saudi Aramco

CNBC

• “Mr Nasser on May 11 called the pipeline a “critical lifeline”.” — Amin Nasser, CEO, Saudi Aramco

The Straits Times

• “I wouldn't call it demand destruction. I would call it demand rationing,” — Amin Nasser, CEO, Saudi Aramco

Reuters

Aramco plans to expand Yanbu’s export capacity beyond the current 5 million bpd and to maintain high-margin refined-product shipments while refinery turnarounds proceed. Market observers anticipate that full normalization will remain contingent on a reopening of Hormuz, a scenario projected to extend into 2027 if the blockade persists beyond mid-June.

Reuters