Saudi Arabia’s prominent oil enterprise, Saudi Aramco, has announced a significant 26% increase in profits for its first quarter, reaching $33.6 billion. This surge is attributed to the strategic use of its east-west pipeline, which facilitated the transport of millions of barrels of oil out of the Gulf amidst ongoing Middle Eastern conflicts. The company’s revenue also saw a considerable rise of nearly 7% from the previous year, totaling $115.5 billion in the first three months.
Despite facing infrastructure attacks and a temporary halt in exports through Gulf ports, Aramco’s east-west pipeline has proven instrumental in maintaining supply. Amin Nasser, the company’s president and CEO, highlighted the pipeline’s capacity to handle 7 million barrels of oil per day as a critical factor in mitigating the global energy shock. This development has provided relief to customers affected by the shipping constraints in the Strait of Hormuz.
The Strait of Hormuz, a crucial passage for about a fifth of the world’s oil and gas supply, has been effectively closed since the onset of the US-Iran conflict in late February. In response, Aramco’s pipeline has allowed oil to flow from the east coast to the Red Sea port of Yanbu. The disruption in the strait has led to a spike in global energy prices, with Brent crude reaching approximately $100 per barrel, representing a 40% increase since the conflict began.
Nasser expressed concerns over the prolonged blockade of the Strait of Hormuz, warning that it could lead to a “catastrophe” for global oil markets. Even if the strait were to reopen immediately, he suggested it would take several months for the market to stabilize. In a statement, he cautioned that continued trade restrictions could extend the supply disruption, potentially delaying market normalization until 2027.
As tensions persist, the United States is awaiting Iran’s response to proposals aimed at reaching an interim agreement to resolve the conflict. Recent clashes near the strait followed former President Donald Trump’s announcement of a naval mission, which was subsequently paused, to reopen the waterway. Meanwhile, Aramco has committed to maintaining its quarterly dividend at $21.9 billion, following a 3.5% increase at the end of last year.