(May 10): Saudi Aramco’s boss warned of a long disruption to oil markets from the near closure of the Strait of Hormuz, while the company reported a jump in profit following higher prices and its ability to redirect exports via a pipeline bypassing the vital waterway.
“If trade flows resume immediately or today through the Strait of Hormuz, it will take a few months for the oil market to rebalance,” Aramco’s chief executive officer Amin Nasser said in emailed comments. “But if trade and shipping remain curtailed by more than a few weeks from today, we anticipate the supply disruption to persist, and the market to normalise only in 2027.”
The comments highlight the deepening risk for the oil market with the conflict in the Middle East now into its third month and the US and Iran showing little progress in negotiations aimed at opening flows. The hostilities have thrown markets into disarray with traffic through Hormuz remaining at a near standstill and oil prices hovering close to US$100 a barrel.
Higher prices of crude and refined products helped Aramco report a 26% increase in first-quarter adjusted net income, which at 126 billion riyals (US$33.6 billion) also beat analysts’ expectations. It maintained dividend payout that are crucial for the Saudi economy. The company said it sold higher volumes of crude, refined fuels and chemical products compared with a year earlier.
Saudi Arabia had been ramping up exports before the war started at the end of February, and it quickly redirected some shipments to an alternative port on the Red Sea within days of the conflict. Still, the volumes being sold through the alternative port of Yanbu are below prewar levels.
“While Aramco has been able to mitigate some of the impact thanks to strategic foresight, such as the East-West pipeline, global energy system supplies remain constrained,” Nasser said. “The energy industry needs to plan and invest more in resilience.”
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The volume of crude sold during the first quarter was higher compared with a year ago but declined on a quarter-on-quarter basis, the company said, without providing more information. Aramco is scheduled to hold an analyst call on Monday.
Pipeline shipments
Pipeline flows ramped up after the start of the war as tankers raced to pick up oil in the Red Sea, rather than in the Gulf. Tanker-tracking data compiled by Bloomberg show observable exports in March were about 3.6 million barrels a day on average, rising to just short of four million a day in April.
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Aramco’s trading unit is also among firms that have sent some crude shipments through the Strait of Hormuz in recent days on ships that mostly have their transponders turned off to avoid detection, according to people familiar with the matter.
The company said it sold crude oil at US$76.90 a barrel during the first quarter, compared with US$64.10 in the quarter ended Dec 31 and US$76.30 a year earlier.
Aramco maintained its quarterly dividend at US$21.9 billion after boosting the payout by 3.5% to the current level at the end of last year. Free cash flow — funds left over from operations after accounting for investments and expenses — came in below the dividend at US$18.6 billion in the quarter.
The company’s gearing ratio, a measure of indebtedness, rose to 4.8% in the quarter from 3.8% at the end of 2025.
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