Middle East war threatens global oil supply, emerging markets – Aramco, Fitch warn

The escalating conflict involving Iran, the United States and Israel could trigger severe disruptions to global energy markets and destabilise emerging economies if the crisis persists, according to warnings from Saudi Aramco and Fitch Ratings.

Business Hallmark had reported that  oil prices rallied sharply on Monday, jumping almost 30%, crossing the $100-a-barrel mark. During the session, Brent climbed to $119.50 and WTI touched $119.48, the highest levels seen since mid-2022, before coming down $6.51, or 6.6%, to $92.45 a barrel for Brent crude earlier on Tuesday, while US West Texas Intermediate (WTI) crude also dropped $6.12, or 6.5%, to $88.65.

Speaking on Tuesday, the president and CEO of Saudi Aramco, Amin H. Nasser, said the war in the Middle East could have “catastrophic consequences” for global oil markets if the disruption to energy supplies continues.

Nasser stressed the urgency of reopening the Strait of Hormuz, a key maritime chokepoint that typically handles about 20 per cent of global oil shipments but has been affected by the ongoing conflict.

“The disruption has caused a severe chain reaction not only in shipping and insurance but also across aviation, agriculture, automotive and other industries,” he said during a media call announcing the company’s 2025 financial results.

“There would be catastrophic consequences for the world’s oil markets the longer the disruption goes on, and the more drastic the consequences for the global economy.”

Oil prices have already shown extreme volatility amid fears of supply disruptions. Prices surged by about 30 per cent on Monday before retreating after comments from Donald Trump suggested the war might end soon.

Nasser described the situation as the most serious crisis the region’s oil and gas industry has faced in recent years, noting that key energy facilities across the Gulf have come under attack.

Iran has launched retaliatory drone and missile strikes against Gulf countries allied with Washington following US-Israeli airstrikes that began on February 28. Energy infrastructure across the region has been affected.

Among the targets was Aramco’s major oil complex at Ras Tanura oil terminal, one of the Middle East’s largest refining and export facilities, where some operations were temporarily halted.

Elsewhere in the Gulf, Bahrain’s Al Ma’ameer oil facility was struck, sparking a fire and forcing the country’s state energy company, Bapco, to declare force majeure. Similar warnings were earlier issued by energy producers in Qatar and Kuwait.

The mounting disruptions come as Aramco reported weaker earnings for 2025. The world’s largest oil exporter posted net income of $93.38 billion, down 12.1 per cent from $106.24 billion recorded in 2024. Adjusted net income also declined by 5.1 per cent to $104.65 billion.

The company attributed the drop partly to higher global supply, economic headwinds and trade tensions, including tariffs imposed by the United States.

Despite the earnings decline, Aramco announced its first-ever share buyback programme worth up to $3 billion over an 18-month period.

Meanwhile, Fitch Ratings warned that the conflict could create new financial and economic risks for emerging market economies, especially those heavily dependent on imported energy.

In a report titled “Iran conflict raises new credit risks for emerging market sovereigns,” the agency said sustained disruptions to Gulf energy flows could strain government finances and trigger wider economic instability.

“More sustained disruption to energy flows than currently assumed in our baseline scenario could significantly damage global investor sentiment,” Fitch said.

According to the agency, rising oil prices could increase inflationary pressures worldwide while forcing central banks to reconsider monetary policy decisions.

Fitch also warned that geopolitical tensions could strengthen the US dollar, weaken international debt markets and raise borrowing costs for countries with fragile financial positions.

Emerging economies reliant on energy imports are particularly exposed. The report noted that net fossil fuel imports account for about three per cent or more of gross domestic product in large economies such as India.

Beyond energy costs, Fitch said the conflict could affect emerging markets through several channels including remittances, exchange rate volatility, fiscal subsidies and reduced access to international finance.

“The Iran conflict could raise additional challenges for some emerging market sovereigns through such channels as energy imports, remittances, fiscal subsidies, exchange rates, and access to international finance,” the agency said.