Saudi Aramco Shares Surge Amid Middle East Tensions

Saudi Aramco shares jumped 4.9% intraday in Riyadh on Sunday, the first day of trading since Brent crude prices topped $90 a barrel on Friday. The state-backed oil giant's shares surged as the Iran war entered its second week, prompting supply disruptions that may send oil prices higher when global markets reopen.

Brent crude, the global benchmark, may climb further in the days ahead after the United Arab Emirates and Kuwait started reducing oil production amid a near-closure of the vital Strait of Hormuz waterway. The Strait handles about a fifth of the world's energy exports.

Aramco has been redirecting oil cargoes to Red Sea facilities at Yanbu on Saudi Arabia's west coast to avoid the chokepoint. However, Goldman Sachs Group Inc. cautioned on Friday that the company's capacity to do so may be limited.

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Key Developments

• Iran's president instructed the military not to target any nation that isn't striking his country, but a senior Iranian official later said Tehran has the right to hit states hosting US military bases.
• Saudi Arabia, the UAE, Kuwait, and Bahrain intercepted Iranian attacks overnight into Sunday.
• Aramco raised the price of its main oil grade for buyers in Asia for April by the most since August 2022 amid the turmoil in the Middle East.
• Aramco has seen more of its fields under attack over the weekend, including Shaybah near the Abu Dhabi border and the company's Berri site.

Impact on Oil Prices

Several traders warned that oil prices could reach $100 within days unless there was some de-escalation of hostilities or change to constraints in the Strait of Hormuz. Aramco's capacity to handle excess capacity and re-route shipments to the Red Sea may offset a decline in exports.

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Capacity and Production

Aramco's two fields under attack, Shaybah and Berri, have a combined capacity of about 1.5 million barrels a day. The company's Ras Tanura refinery, Saudi Arabia's largest, was forced to halt operations last week following a drone strike in the area.