Saudi Aramco, the national oil company of Saudi Arabia, experienced a significant 26% increase in its profits during the first quarter, largely due to its strategic east-west pipeline that facilitated oil shipments despite regional conflicts. The company’s profits soared to $33.6 billion, with revenue climbing nearly 7% to reach $115.5 billion compared to the same period last year.
This profit surge occurred even as Aramco faced challenges such as attacks on its infrastructure and a temporary halt in exports via its Gulf ports. Amin Nasser, Aramco’s president and CEO, highlighted the importance of their east-west pipeline, which reached a maximum capacity of 7 million barrels of oil per day. He emphasized its role in alleviating the effects of a global energy crisis by providing a crucial supply route and aiding customers impacted by the shipping constraints in the Strait of Hormuz.
The Strait of Hormuz, a vital passageway for roughly 20% of the world’s oil and gas supply, has been effectively closed since the US-Iran conflict erupted in late February. Aramco’s pipeline enables the transfer of oil from the east coast to the Red Sea port of Yanbu, bypassing this critical chokepoint. The disruption in the strait has led to a sharp increase in global energy prices, with Brent crude oil trading at approximately $100 a barrel, marking a 40% rise since the onset of the conflict.
Nasser had previously cautioned that the ongoing blockade of the Strait of Hormuz could spell disaster for global oil markets. He later noted that even if the strait were to reopen immediately, it would still take several months for the market to stabilize. In a statement, he projected that if trade and shipping remain hindered for more than a few weeks, the supply disruption could last until 2027.
These developments occur amid the United States awaiting Iran’s response to proposals for a tentative agreement to resolve the conflict. Recent days have seen renewed fighting around the strait, following a naval mission announcement and subsequent pause by former President Donald Trump aimed at reopening the waterway. Despite these challenges, Aramco stated it would continue its quarterly dividend at $21.9 billion, following a 3.5% increase at the close of the previous year.