Saudi Aramco, the state oil company of Saudi Arabia, has announced a significant 26% increase in profits for the first quarter of the year, reporting earnings of $33.6 billion. This boost comes despite regional conflicts affecting oil exports through Gulf ports. The company’s revenue also saw a rise of nearly 7% from the previous year, reaching $115.5 billion.
The increase in profits can be attributed to the strategic use of Aramco’s east-west pipeline, which has been crucial in maintaining oil shipments amidst disruptions. This pipeline, operating at its full capacity of 7 million barrels per day, allows the transport of oil from Saudi Arabia’s east coast to the Red Sea port of Yanbu, bypassing the troubled Strait of Hormuz. Amin Nasser, Aramco’s president and CEO, emphasized the pipeline’s role in alleviating the global energy crisis and providing stability to markets facing shipping challenges.
The closure of the Strait of Hormuz, a critical passage for about 20% of the world’s oil and gas supply, has significantly impacted global energy prices. Since the onset of the US-Iran conflict in late February, Brent crude prices have surged to approximately $100 a barrel, marking a 40% increase from pre-conflict levels. Nasser warned that even if trade through the strait resumes immediately, the oil market would require several months to stabilize. He projected that a prolonged blockade could delay market normalization until 2027.
As the US waits for Iran’s response to proposals aimed at ending the conflict, tensions remain high. Recent days have seen renewed fighting near the strait, following an announcement and subsequent pause of a US naval mission intended to reopen the passage. Amidst these geopolitical challenges, Aramco has committed to maintaining its quarterly dividend at $21.9 billion, following a 3.5% increase at the end of the previous year.
