The President and Chief Executive Officer of Saudi Aramco, Amin Nasser, warned that the repercussions of targeting energy infrastructure in the region are not limited to its markets, but rather extend to economies and markets in various parts of the world, stressing that protecting energy facilities and supply routes requires international cooperation, in light of the challenges posed by the recent unrest to global energy security.
Al-Nasser said, during his speech at the World Petroleum Conference in Riyadh, that the disturbances in the Strait of Hormuz and the attacks on the energy infrastructure in the region revealed the extent of the interconnectedness between the links in the global supply chain, noting that the continued disturbances exacerbate the pressures on the markets for crude oil and refined products, especially diesel.
He added that available commercial stocks no longer provide only a limited margin to absorb shocks, warning against relying on them as a permanent solution to energy security, stressing that restoring the movement of supplies through the Strait of Hormuz and returning confidence to the markets remain essential factors for relieving pressures on the energy chain.
He explained that the Saudi energy system continued to operate with high reliability during the crisis, thanks to strategic investments in infrastructure and operational capabilities, in addition to the diversification of export paths, the integration of facilities and digital protection systems.
Proactive investments enhance resilience
Al-Nasser stressed that flexibility in the energy sector is not achieved through a single pipeline, facility, or technology, but rather through an integrated system that includes infrastructure, spare production capacity, multiple export routes, and financial and human capabilities that allow continued work and investment during crises.
He added that Aramco, in coordination with the Ministry of Energy, is studying additional options for exporting crude oil, in addition to expanding storage capabilities outside the Kingdom, and employing advanced technologies to inspect facilities, speed up maintenance and repair work, and reduce damage.
He stressed that the investments necessary to build resilience are borne by the parties that implement them, while their benefits extend to economies, consumers, companies and investors, noting that avoiding disruptions represents an economic value that should be more appreciated, in a way that supports the sustainability of investments necessary for energy security.
“Kitfa” supports the continuity of supplies
Al-Nasser pointed out that the “Iktva” program to enhance the total added value of the supply sector, which Aramco launched more than a decade ago, contributed to building a local base for supplies and supporting the company’s ability to respond to exceptional circumstances.
He said that more than 90 percent of the materials used to restore operations during the past eight months were provided from local sources, which allowed restoration work to be carried out within hours and days instead of weeks and months.
He added that the localization of supply chains represents an important factor in enhancing readiness to confront crises, in addition to its role in supporting the local economy, developing national industries, and creating job opportunities.
He emphasized that building resilience requires continuous investments over years, not short-term decisions, noting the importance of protecting the capabilities that have been developed and preparing for the future needs of the Kingdom.
Increase gas production by 80% by 2030
Regarding the company’s future plans, Al-Nasser said that the expansion of gas production represents a major axis in Aramco’s strategy, aiming to increase sales gas production by about 80 percent by 2030, compared to 2021 levels.
He added that the expansion of gas complements the national renewable energy program, which includes solar and wind energy projects, with the aim of diversifying sources of electricity generation and reducing emissions.
He explained that combining gas and renewable energy supports building a more diversified and flexible mix for electricity generation, and contributes to improving the use of resources and meeting the needs of the local economy, in parallel with the development of carbon capture, use and storage technologies, artificial intelligence and advanced digital solutions.
He pointed out that these efforts are in line with the goals of Saudi Vision 2030, especially in the areas of economic diversification, developing local capabilities, enhancing industrialization, creating jobs, and building a more sustainable energy system.
The Middle East is a pillar of global energy security
Al-Nasser stressed that the Middle East region remains a fundamental pillar of global energy security, given its large share of proven oil reserves and surplus production capacity, pointing out that more than 90 percent of the global surplus production capacity is concentrated in the region, according to what he mentioned in his speech.
He added that diversifying sources of supply does not necessarily mean being able to diversify the geographic locations from which energy comes, warning that targeting infrastructure in the region will have an impact on markets and economies in various parts of the world.
He stressed that protecting energy facilities and transportation routes on which the global economy depends requires joint international efforts, as no single country, no matter how capable it is, can protect all elements of the global supply system alone.
Multiple paths for energy transformation
Regarding the future of energy, Al-Nasser said that transformation paths will differ from one country to another according to its needs and economic conditions, stressing the continued importance of oil and gas in the global energy mix.
He added that providing reliable energy at affordable prices represents a key factor in supporting economic growth, creating jobs, and improving living standards, especially in developing economies that face challenges in meeting their increasing energy needs.
He concluded by emphasizing the importance of building an integrated energy system that combines oil, gas and renewable energy, and is efficient in natural conditions and able to withstand pressure, thus enhancing energy security in the Kingdom and the world and supporting future growth.
Chinese stocks fell during trading on Monday, affected by the rise in global bond yields and the escalation of trade and geopolitical tensions, while the yuan maintained its gains near its highest levels against the dollar in 3 and a half years, benefiting from the decline in expectations for a US interest rate hike during October.
The CSI 300 Index, which includes the largest companies listed in Shanghai and Shenzhen, fell by 0.2 percent during morning trading, remaining close to its lowest levels in a year, while the Shanghai Composite Index fell by 0.1 percent.
In Hong Kong, the Hang Seng Index rose by 0.2 percent, supported by gains in banking and biotechnology stocks, versus a decline in semiconductor and artificial intelligence companies.
The poor performance came after the CSI 300 index recorded its ninth consecutive weekly loss, amid investors’ concerns about the slowdown in the Chinese economy and continued external pressures.
Caitong Securities said that the rise in global bond yields represents the main source of concern for the markets, also warning of the risks of a potential debt crisis in some of the financially weaker European economies.
The pressures increased with the rise in oil prices as a result of the expansion of the war in the Middle East, which strengthened inflationary fears and weakened expectations of reducing global borrowing costs.
China's recent support measures did not succeed in calming investors. Wu Qing, Chairman of the China Securities Regulatory Commission, held a meeting on Saturday with market participants to discuss ways to develop the capital market.
On Friday, the regulatory authorities also published draft rules to facilitate the establishment of equity mutual funds, with the aim of encouraging the flow of funds and enhancing the role of investment institutions.
However, the impact of the two steps remained limited in the face of concerns related to global interest rates and trade tensions. Especially with the continued weakness of local demand and real estate investment.
The technology sector came under additional pressure after the United States began investigations into possible patent infringements, including the companies Luxshare Precision Industry and Foxconn Industrial Internet.
“Foxconn” shares fell by up to 7 percent, recording the lowest level in 6 months, while “Luxshare” shares fell by 2 percent, approaching its lowest levels since March.
Losses extended to the consumer electronics, communications, and real estate sectors, while banking and consumer goods stocks recorded relatively better performance.
Concerns about Chinese exports increased after European Trade Commissioner Maroš Šefčovič announced on Friday that an agreement had been reached with Beijing that could reduce Chinese hybrid car exports to the European Union by more than half.
The agreement came after trade talks aimed at addressing the growing European deficit with China, but it raised questions about the future of external demand for Chinese industrial products.
This development poses a challenge to the Chinese economy, which relies on strong exports to compensate for weak domestic consumption and investment.
In the currency market, the local yuan settled near 6.6920 against the dollar during late morning trading, approaching its highest levels in 3 and a half years.
The People's Bank of China set the daily reference rate at 6.7313 yuan to the dollar, the strongest level since February 2023.
The yuan has risen by about 4 percent since the beginning of the year, and by about 9 percent since late 2024, supported by strong exports and expectations by some Western financial institutions that the currency is undervalued.
But analysts warned that the widening gap between US and Chinese bond yields, along with the continued strength of the dollar, may limit additional gains.
Cai Shaoli, an analyst at Hua Tai Futures, said that the weakness of the euro gives the dollar additional support, which may put pressure on the yuan if the strength of the US currency continues.
In turn, Fan Yongjia, an analyst at COFCO Futures, saw that strong exports support the yuan, but he warned of the impact of escalating trade protectionism on external demand.
China Merchants Futures expected the currency to move within a range between 6.65 and 6.75 yuan to the dollar, considering that its continued rise in one direction is not guaranteed.
The developments reveal a discrepancy between the resilience of the Chinese currency and the weakness of stocks, in light of a global environment characterized by high returns and trade tensions.
The markets' ability to recover in the coming period will depend on the stability of oil prices, the direction of US monetary policy, and the extent of Beijing's success in enhancing confidence and domestic demand, while maintaining export momentum.
