The escalating conflict involving Iran, the United States and Israel is raising fears of major disruptions to global energy supplies, with Saudi Aramco and Fitch Ratings warning that the crisis could also place additional pressure on emerging market economies.
Oil markets have already reacted sharply to the tensions. Prices surged nearly 30 per cent on Monday, briefly crossing the $100-per-barrel mark. During the session, Brent crude climbed to $119.50 while US West Texas Intermediate (WTI) touched $119.48 - the highest levels since mid-2022 - before retreating. Brent later fell by $6.51, or 6.6 per cent, to $92.45 per barrel early Tuesday, while WTI dropped $6.12, or 6.5 per cent, to $88.65.
Speaking on Tuesday, Aramco’s president and chief executive officer, Amin H. Nasser, warned that the worsening Middle East conflict could have “catastrophic consequences” for global oil markets if disruptions continue.
He stressed that reopening the Strait of Hormuz was essential to stabilising global energy supplies. The strategic waterway normally carries about 20 per cent of the world’s oil shipments but has faced disruptions amid the ongoing hostilities.
“The disruption has caused a severe chain reaction not only in shipping and insurance but also across aviation, agriculture, automotive and other industries,” Nasser said during a media briefing to announce Aramco’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,” he added.
The conflict has also led to attacks on key energy infrastructure across the Gulf region as Iran launched retaliatory drone and missile strikes on US-allied countries following joint airstrikes by Washington and Tel Aviv on February 28.
Among the facilities affected was Aramco’s major oil export complex at Ras Tanura oil terminal, one of the largest refining and export hubs in the Middle East, where some operations were temporarily halted.
Elsewhere, Bahrain’s Al Ma’ameer oil facility was hit, sparking a fire and forcing the country’s state-owned energy company, Bapco, to declare force majeure. Similar warnings have also been issued by energy producers in Qatar and Kuwait, signalling potential disruptions to supply contracts.
The developments come as Aramco reported weaker financial performance for 2025. The company posted net income of $93.38 billion, a 12.1 per cent drop from $106.24 billion recorded in 2024.
Adjusted net income also declined by 5.1 per cent to $104.65 billion, reflecting higher global supply, economic headwinds and trade tensions, including tariffs imposed by the United States.
Despite the earnings decline, Aramco announced plans for its first-ever share buyback programme valued at up to $3 billion over an 18-month period.
Meanwhile, Fitch Ratings warned that the conflict could create new financial risks for emerging market economies, particularly those heavily dependent on imported energy.
In a report titled “Iran conflict raises new credit risks for emerging market sovereigns,” the agency said prolonged disruptions to Gulf energy supplies could weaken investor confidence and heighten economic pressures in vulnerable countries.
“More sustained disruption to energy flows than currently assumed in our baseline scenario could significantly damage global investor sentiment,” Fitch said.
The agency noted that rising energy prices could increase inflationary pressures globally and force central banks to reconsider their monetary policy stance.
Fitch also warned that geopolitical tensions could strengthen the US dollar, weaken global debt markets and increase borrowing costs for countries with fragile financial positions.
Emerging economies that rely heavily on imported fossil fuels are particularly exposed. The report noted that net fossil fuel imports account for around three per cent or more of gross domestic product in major 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 report said.
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