Aramco Share Price Surges to 52-Week High Amid Strait of Hormuz Disruption

Saudi Aramco Shares Reach 52-Week High Amid Escalating Middle East Tensions

On March 9, Saudi Aramco shares surged by almost 2% to reach a 52-week high of 27.4 SAR, extending gains from the previous session's 4% rally. The stock's strong performance marks its strongest performance since April 2023.

The rally in Saudi Aramco shares is attributed to the sharp increase in crude oil prices, which have surged by over 25% to nearly $120 per barrel amid growing geopolitical tensions and concerns about potential disruptions to oil shipments from the Persian Gulf. The global oil benchmark, Brent crude, jumped to $119.50 per barrel before easing slightly to trade around $112.98. West Texas Intermediate (WTI), the US benchmark crude, climbed to $119.48 per barrel before retreating to $110.17.

The escalation of the war in the Middle East has raised concerns about the potential disruption of oil production and shipping from the region. The Strait of Hormuz, a narrow waterway that serves as a crucial shipping route for oil and gas, has become a major concern for global energy markets. According to Rystad Energy, approximately 15 million barrels of crude oil, or around 20% of the world's supply, pass through the Strait of Hormuz every day.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The conflict has already led to several Gulf countries adjusting their output. Iraq, Kuwait, and the UAE have reduced oil production, partly due to export capacity constraints caused by shipping disruptions. Saudi Aramco has also faced disruptions, with several of its facilities coming under attack. The company has begun rerouting oil shipments through Red Sea export facilities on Saudi Arabia's western coast to avoid potential disruptions in the Strait of Hormuz.

Saudi Aramco has also raised the price of its main crude grade for Asian buyers for April delivery, marking the largest increase since August 2022 amid the escalating geopolitical turmoil. The company's infrastructure, including the Shaybah oil field and the Berri facility, has been targeted in attacks, further intensifying concerns about supply shortages.