Saudi Aramco, the state oil company of Saudi Arabia, has announced a significant 26% increase in its first-quarter profits, reaching $33.6 billion. This surge comes despite ongoing conflicts in the Middle East, as the company’s strategic east-west pipeline facilitated the transportation of millions of barrels of oil beyond the Gulf. During the same period, Aramco’s revenue climbed nearly 7% compared to the previous year, totaling $115.5 billion.
The company’s president and CEO, Amin Nasser, emphasized the importance of the east-west pipeline, which has been operating at its full capacity of 7 million barrels of oil per day. Nasser highlighted that this pipeline has been crucial in mitigating the global energy shock and providing relief to customers affected by shipping constraints in the Strait of Hormuz. This vital waterway, through which approximately 20% of the world’s oil and gas supply normally passes, has been effectively closed since the onset of the US-Iran war in late February. The pipeline allows Aramco to transport oil from its east coast to the Red Sea port of Yanbu.
The closure of the Strait of Hormuz has led to a spike in global energy prices, with Brent crude, the international benchmark, trading at about $100 a barrel—around 40% higher than before the conflict. Nasser had previously warned that the ongoing blockade of the strait would have catastrophic effects on global oil markets. He noted that even if the strait were to reopen immediately, it would take several months for the market to stabilize.
In a statement, Nasser explained that if trade flows through the Strait of Hormuz were to resume immediately, it would take a few months for the oil market to rebalance. However, he cautioned that if the disruption persists beyond a few weeks, supply issues could continue, potentially delaying market normalization until 2027. These remarks come as the United States awaits a response from Iran regarding proposals for an interim deal aimed at ending the conflict. Recent days have seen intensified fighting around the strait following former President Donald Trump’s announcement, and subsequent pause, of a naval mission intended to reopen the waterway.
Despite these challenges, Aramco has maintained its quarterly dividend at $21.9 billion, following a 3.5% increase at the end of the previous year. The company remains resilient amid geopolitical tensions, leveraging its strategic infrastructure to navigate a volatile energy landscape.