Saudi Aramco, the state oil giant of Saudi Arabia, has announced a significant 26% increase in profits for the first quarter, reaching $33.6 billion. This financial upswing is largely attributed to the strategic use of its east-west pipeline, which facilitated the transport of millions of barrels of oil out of the Gulf region amid ongoing Middle East conflicts. The company’s revenues also saw a nearly 7% rise from the previous year, amounting to $115.5 billion.
Despite facing infrastructure attacks and a temporary halt in exports through Gulf ports, Aramco managed to sustain operations and profits. Amin Nasser, the president and CEO, highlighted the importance of the east-west pipeline, which has reached its full capacity of 7 million barrels per day. He emphasized its role as a vital supply line, alleviating the impact of global energy disruptions and supporting customers affected by shipping limitations at the Strait of Hormuz. This vital strait, typically a channel for about 20% of the world’s oil and gas, has been effectively closed since the US-Iran conflict erupted in late February.
The disruption in the Strait of Hormuz has contributed to a surge in global energy prices, with Brent crude oil prices climbing to approximately $100 per barrel, marking a 40% increase since the conflict began. Nasser previously warned that the continued blockade of this crucial waterway could spell disaster for global oil markets. He also noted that even if the strait were to reopen immediately, it would take several months for the oil market to stabilize.
In a statement to Bloomberg, Nasser expressed concerns about prolonged trade and shipping restrictions. He indicated that if these constraints persist beyond a few weeks, the supply disruption could extend, delaying market normalization until 2027. Meanwhile, the US is awaiting Iran’s response to proposals for an interim deal aimed at resolving the conflict, with recent skirmishes occurring near the strait following a naval mission announcement by then-President Donald Trump.
Amid these developments, Aramco has decided to maintain its quarterly dividend at $21.9 billion, following a 3.5% increase at the close of last year. This decision reflects the company’s confidence in its financial position despite the challenges posed by geopolitical tensions and market volatility.