Saudi Aramco Posts Strong Q1 Profit Amid Gulf Shipping Crisis

Aramco reported a net profit of approximately $33.6 billion for the first quarter, a 26% increase year-on-year.

Financial Performance

Aramco's net profit surged to roughly $33.6 billion in the first quarter of the year, marking a 26% rise compared to the same period in 2023. An alternate figure put the increase at 25%, reaching $32.5 billion.

Revenue climbed to $115.5 billion, a nearly 7% year-on-year increase. The company maintained its quarterly dividend at $21.9 billion, following a 3.5% payout increase at the end of 2023.

Operational Context

These results were released against a backdrop of severe regional disruptions. The Strait of Hormuz—through which approximately 20% of global oil and gas supply normally passes—has been effectively closed since late February. The closure stems from conflict involving the US, Iran, and Israel, as well as a reported US naval blockade.

Aramco's East-West Pipeline has been operating at maximum capacity, shipping 7 million barrels per day from the east coast to the Red Sea port of Yanbu. The company produced 11.1 million barrels per day in the fourth quarter of the previous year.

Market Context

Brent crude traded between $100 and $101.29 per barrel, roughly 40% higher than pre-conflict levels of around $70 per barrel, though below wartime highs above $119.

Company Statements

Amin Nasser, Aramco's president and CEO, highlighted the importance of the East-West pipeline, stating it "proved itself to be a critical supply artery." He added that it helps mitigate the impact of a global energy shock and provides relief to customers affected by shipping constraints in the Strait of Hormuz.

Nasser also warned of prolonged market disruption:

"Even if the strait reopened immediately, it would take several months for the oil market to rebalance. If shipping remains curtailed for more than a few weeks, the supply disruption could persist until 2027."

Ownership Structure

The Saudi government directly owns more than 80% of the company, while the Public Investment Fund holds 16%. Saudi Arabia relies heavily on Aramco's dividends to fund domestic spending. The company's annual profits declined 12% in the previous year.