Saudi Aramco, the state oil giant of Saudi Arabia, has announced a significant 26% increase in its first-quarter profits, reaching $33.6 billion. This surge in earnings comes despite regional turmoil, as the company’s strategic east-west pipeline enabled the transportation of millions of barrels of oil from the Gulf, circumventing export challenges due to Middle Eastern conflicts. Revenue for the quarter rose by nearly 7% year-on-year, totaling $115.5 billion.
The east-west pipeline, which has reached its full capacity of 7 million barrels of oil per day, has proved to be an essential route for Saudi Aramco. Amin Nasser, the president and CEO, emphasized the pipeline’s role in alleviating the effects of a global energy shock. “Our east-west pipeline… has proven itself to be a critical supply artery, helping to mitigate the impact of a global energy shock,” Nasser stated, underscoring its importance in providing relief to customers facing shipping restrictions at the Strait of Hormuz, which remains effectively closed since the onset of the US-Iran conflict in late February.
The closure of the Strait of Hormuz, a critical passageway for about 20% of the world’s oil and gas, has resulted in heightened global energy prices, with Brent crude oil prices climbing to approximately $100 per barrel—an increase of around 40% from pre-conflict levels. Nasser had earlier cautioned that the blockade’s continuation could spell disaster for international oil markets. He warned that even if the strait were to reopen immediately, it would still take several months for market conditions to normalize.
“If trade flows resume immediately or today through the strait of Hormuz, it will take a few months for the oil market to rebalance,” Nasser noted in an email statement. He further predicted that if the shipping constraints persist for more than a few weeks, the disruption could last until 2027. This statement comes amidst ongoing US-Iran negotiations for a potential interim agreement to resolve the conflict, while recent skirmishes near the strait followed a temporary halt by the US on a naval operation aimed at clearing the waterway.
In light of these developments, Saudi Aramco has decided to maintain its quarterly dividend at $21.9 billion, following a 3.5% increase at the close of last year. The company’s strategic moves and infrastructure resilience amid geopolitical tensions highlight its role in stabilizing the global oil supply chain.