The Ruwais refinery in Abu Dhabi, described by state oil company Adnoc as the world’s fourth-largest single-site refinery, has halted operations as a precautionary measure following a drone attack on the nearby industrial complex, a source confirmed on Tuesday. The shutdown comes as Saudi Aramco’s chief executive warned that the escalating Middle East conflict could trigger “catastrophic consequences” for global oil markets and issued an urgent call for the reopening of the Strait of Hormuz—a waterway that handles approximately 20 per cent of global petroleum liquids consumption.
“The Ruwais refinery has halted operations out of precaution,” the source stated, speaking on condition of anonymity to discuss sensitive operational matters. The Abu Dhabi Media Office had earlier confirmed that a drone attack caused a fire in Ruwais Industrial City, though neither authorities nor the source indicated whether the refinery itself sustained direct hits.
The Ruwais complex, which underwent a major expansion completed in 2024, currently maintains a combined refining capacity exceeding 900,000 barrels per day. The Ruwais Refinery East expansion alone enhanced daily output by approximately 420,000 barrels, positioning the facility among the highest-capacity refineries worldwide. The complex serves as a cornerstone of the United Arab Emirates’ energy infrastructure and plays a critical role in both domestic supply and international export markets.
Amin H. Nasser, president and chief executive of Saudi Aramco, used the company’s 2025 earnings announcement to deliver a stark assessment of the regional crisis. “The disruption has caused a severe chain reaction in not only shipping and insurance, but there’s also a drastic domino effect on aviation, agriculture, automotive and other industries,” Nasser stated during a media call on Tuesday. “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.”
Nasser emphasised the critical importance of the Strait of Hormuz, which normally carries roughly 20 million barrels per day of crude oil and petroleum products—equivalent to about 20 per cent of global consumption and 26.2 per cent of world maritime oil trade. According to data from the U.S. Energy Information Administration, approximately 84 per cent of crude oil and condensate transiting the strait is destined for Asian markets, with China alone accounting for 37.7 per cent of total flows, followed by India at 14.7 per cent, South Korea at 12.0 per cent, and Japan at 10.9 per cent.
“While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced,” Nasser said. “It’s absolutely critical that shipping resumes in the Strait of Hormuz.”
Tehran appears to be executing a strategy of targeting major Gulf refineries and energy installations as it tightens its chokehold on regional energy flows. Iranian forces have fired at energy facilities across the Gulf, including Aramco’s sprawling Ras Tanura complex—one of the Middle East’s largest refineries with a capacity of 550,000 barrels per day—which halted some operations after drone debris caused fires despite interception attempts.
Saudi oil fields have also come under direct targeting, while state-owned QatarEnergy, one of the world’s largest producers of liquefied natural gas, was forced to halt production last week and declare force majeure after Iranian drones attacked two of its main production hubs. The declaration shields the company from contractual penalties as it suspends LNG and associated products including urea, polymers, methanol, and aluminium.
Energy producers in Kuwait have issued similar force majeure declarations, warning that events beyond their control may prevent them from meeting export commitments. Qatar’s Ministry of Defence reported intercepting 10 drones and two cruise missiles launched from Iran, while the Qatari Cabinet condemned the “successive waves of Iranian attacks” as a “flagrant violation of its sovereignty.”
A driver working at the Ruwais industrial complex described the immediate aftermath of the attack to AFP: “Just as we were about to leave, we saw two more bursts of fire rising from the complex, with loud sounds like explosions.” The driver, who was collecting staff ordered to evacuate, requested anonymity due to security concerns.
Oil markets have experienced extreme volatility in response to supply disruptions and geopolitical uncertainty. Brent crude prices surged 30 per cent on Monday, briefly approaching 120 per barrel, before plunging following comments from United States President Donald Trump suggesting the war may conclude soon. Prior to the escalation, crude prices had averaged 69.20 per barrel in 2025, down from 80.20 in 2024, reflecting softer market conditions and rising global supply.
Analysts warn that prolonged disruption could push prices significantly higher. Coface, the French credit insurance group, has projected that Brent crude could exceed 147 per barrel—the historic peak reached in 2008—in the event of sustained supply interruptions. The organisation estimates that a prolonged 15 increase in Brent prices could reduce global economic growth by approximately 0.2 percentage points while adding nearly 0.5 percentage points to inflation, potentially triggering stagflationary conditions.
“The Gulf energy sector is getting whacked from multiple angles,” observed Robert Mogielnicki, a non-resident scholar at the Arab Gulf States Institute. “Energy facilities being targeted, export capability through the strait is hampered, and storage capacity is filling up.”
Qatar’s foreign ministry spokesman, Majed al-Ansari, warned on Tuesday that attacks on energy facilities “on both sides, are a dangerous precedent…it will cause repercussions throughout the world.”
The capacity to bypass the Strait of Hormuz remains constrained despite existing infrastructure. Saudi Arabia operates the 5 million barrel-per-day East-West crude oil pipeline, which runs from the Abqaiq processing centre to the Yanbu port on the Red Sea. Aramco temporarily expanded this capacity to 7 million barrels per day in 2019 by converting natural gas liquids pipelines, though current utilisation levels limit available spare capacity.
The UAE operates a 1.8 million barrel-per-day pipeline linking onshore oil fields to the Fujairah export terminal in the Gulf of Oman, though increased regular use has reduced excess capacity for emergency rerouting. The U.S. Energy Information Administration estimates that approximately 2.6 million barrels per day of combined pipeline capacity from Saudi Arabia and the UAE could be available to bypass the Strait of Hormuz in the event of severe disruption—far below the 20 million barrels per day that normally transit the waterway.
Iran inaugurated the Goreh-Jask pipeline and terminal on the Gulf of Oman in 2021 with a capacity of approximately 300,000 barrels per day, though exports through this route had declined to less than 70,000 barrels per day by September 2024.
Nasser’s warnings accompanied Aramco’s announcement of its 2025 financial results, which revealed a 12.1 per cent decline in adjusted net income to 104.7 billion for the full year, compared to higher earnings in 2024. Fourth-quarter adjusted profit reached 25.1 billion, slightly exceeding analyst consensus estimates of 24.8 billion.
The Saudi state oil giant, which conducted a record-breaking initial public offering in 2019, generated 136.2 billion in operating cash flow during 2025 and achieved free cash flow of 85.4 billion. Capital investments totalled 52.2 billion, in line with company guidance and 1.0 billion lower year-on-year, with 2026 investment guidance set at 50.0 billion to 55.0 billion.
Despite market headwinds including higher global supply, U.S. tariffs, and economic uncertainties, Aramco announced a 3.5 per cent year-on-year increase in its base dividend to 21.89 billion for the fourth quarter—the fourth consecutive annual increase. Total shareholder distributions for 2025 reached 85.5 billion. The company also unveiled its first-ever share buyback programme, authorising repurchases of up to 3.0 billion over 18 months.
“Our disciplined capital allocation, combined with our lower-cost, adaptable, and highly-reliable operations, drove strong financial performance in a year marked by price volatility,” Nasser stated in the earnings release. “Global spare capacity is mostly concentrated in this region, so it is absolutely critical that shipping resumes in the Strait of Hormuz.”
The current crisis represents the most severe threat to Strait of Hormuz shipping since the 1980s Tanker War during the Iran-Iraq conflict, when approximately 546 commercial vessels were attacked over eight years. The waterway’s strategic significance has made it a recurring focal point of regional tensions, with Iran periodically threatening closure in response to international pressure over its nuclear programme.
In 2019, attacks on Saudi oil infrastructure—including the Ab “on both sides, are a dangerous precedent…it will cause repercussions throughout the world.”
The capacity to bypass the Strait of Hormuz remains constrained despite existing infrastructure. Saudi Arabia operates the 5 million barrel-per-day East-West crude oil pipeline, which runs from the Abqaiq processing centre to the Yanbu port on the Red Sea. Aramco temporarily expanded this capacity to 7 million barrels per day in 2019 by converting natural gas liquids pipelines, though current utilisation levels limit available spare capacity.
The UAE operates a 1.8 million barrel-per-day pipeline linking onshore oil fields to the Fujairah export terminal in the Gulf of Oman, though increased regular use has reduced excess capacity for emergency rerouting. The U.S. Energy Information Administration estimates that approximately 2.6 million barrels per day of combined pipeline capacity from Saudi Arabia and the UAE could be available to bypass the Strait of Hormuz in the event of severe disruption—far below the 20 million barrels per day that normally transit the waterway.
Iran inaugurated the Goreh-Jask pipeline and terminal on the Gulf of Oman in 2021 with a capacity of approximately 300,000 barrels per day, though exports through this route had declined to less than 70,000 barrels per day by September 2024.
Nasser’s warnings accompanied Aramco’s announcement of its 2025 financial results, which revealed a 12.1 per cent decline in adjusted net income to 104.7 billion for the full year, compared to higher earnings in 2024. Fourth-quarter adjusted profit reached 25.1 billion, slightly exceeding analyst consensus estimates of 24.8 billion.
The Saudi state oil giant, which conducted a record-breaking initial public offering in 2019, generated 136.2 billion in operating cash flow during 2025 and achieved free cash flow of 85.4 billion. Capital investments totalled 52.2 billion, in line with company guidance and 1.0 billion lower year-on-year, with 2026 investment guidance set at 50.0 billion to 55.0 billion.
Despite market headwinds including higher global supply, U.S. tariffs, and economic uncertainties, Aramco announced a 3.5 per cent year-on-year increase in its base dividend to 21.89 billion for the fourth quarter—the fourth consecutive annual increase. Total shareholder distributions for 2025 reached 85.5 billion. The company also unveiled its first-ever share buyback programme, authorising repurchases of up to 3.0 billion over 18 months.
“Our disciplined capital allocation, combined with our lower-cost, adaptable, and highly-reliable operations, drove strong financial performance in a year marked by price volatility,” Nasser stated in the earnings release. “Global spare capacity is mostly concentrated in this region, so it is absolutely critical that shipping resumes in the Strait of Hormuz.”
The current crisis represents the most severe threat to Strait of Hormuz shipping since the 1980s Tanker War during the Iran-Iraq conflict, when approximately 546 commercial vessels were attacked over eight years. The waterway’s strategic significance has made it a recurring focal point of regional tensions, with Iran periodically threatening closure in response to international pressure over its nuclear programme.
In 2019, attacks on Saudi oil infrastructure—including the Abqaiq processing facility and Khurais oil field—temporarily halved the kingdom’s production and triggered the largest single-day oil price surge in decades. The 2021 Suez Canal blockage by the container ship Ever Given demonstrated how chokepoint disruptions cascade through global supply chains, delaying an estimated 9.6 billion in trade daily.
The present conflict differs in scope and intensity. Iranian attacks have directly targeted energy infrastructure across multiple Gulf states simultaneously, rather than focusing on shipping alone. The targeting of Qatar’s LNG facilities carries particular significance given that roughly 20 per cent of global liquefied natural gas trade transits the Strait of Hormuz, with Qatar accounting for the vast majority of those volumes.
The oil-rich Gulf region has historically maintained spare production capacity to buffer supply shocks, but years of OPEC+ production cuts have eroded this cushion. Current estimates place OPEC+ surplus capacity at approximately 4 to 5 million barrels per day, concentrated primarily in Saudi Arabia and the UAE—precisely the nations now facing direct infrastructure threats.
Throughout 2024 and early 2025, the OPEC+ alliance oversaw production increases that contributed to price erosion, with Saudi Arabia reducing output by 7 per cent in 2024 following a 9 per cent decline in 2023. Russia, Kuwait, and Algeria implemented similar reductions. These cuts, initially designed to stabilise markets amid rising non-OPEC supply, have left the alliance with limited flexibility to respond to sudden shortages.
The convergence of restricted supply routes, targeted infrastructure attacks, and diminished spare capacity creates a precarious equilibrium that analysts warn could sustain elevated price volatility regardless of whether the military conflict resolves quickly. As Nasser emphasised, the “drastic domino effect” extends far beyond immediate energy markets into aviation, agriculture, automotive manufacturing, and industrial sectors dependent on stable hydrocarbon supplies and derivative products.
