Key facts
- Saudi Aramco's second-quarter profit increased by 33% to $33.4 billion.
- Higher oil prices, influenced by geopolitical conflict, drove the profit surge.
- The company used pipelines to circumvent disruptions in the Strait of Hormuz.
- New risks emerge as Houthi militants threaten Red Sea tanker routes.
- Aramco maintained its dividend payout of $21.9 billion.
Saudi Aramco reported a 33% increase in second-quarter profit, reaching $33.4 billion, as higher oil prices driven by geopolitical conflict boosted earnings. The company successfully navigated disruptions in the Strait of Hormuz by rerouting exports through pipelines, such as the East-West Pipeline, and utilizing storage capacity and export terminals.
Benchmark Brent crude averaged nearly $97 a barrel during the quarter. Despite the closure of Hormuz causing significant supply disruptions, Aramco managed to maintain exports. However, the company now faces new risks as Yemen's Houthi group threatens to attack tankers using the Red Sea route, a critical alternative for Saudi exports.
Aramco's CEO, Amin Nasser, highlighted the company's reliance on strategic infrastructure to sustain production and exports. Key Aramco facilities were targeted in July attacks, and the company is assessing the impact, though no material effect on operations or financial performance was reported as of the quarter's end.
The company also benefited from surging prices for oil products like diesel and jet fuel, which often outpaced crude gains. Even with a temporary dip in Brent crude prices following a brief US-Iran peace deal, product prices remained elevated. Aramco has been maximizing fuel exports from its Red Sea coast refineries.
Liquids production decreased by 28% to 7.57 million barrels per day, and natural gas output fell by 16%. The company maintained its base dividend at approximately $21.9 billion, a crucial component for Saudi Arabia's public finances. Aramco's gearing, a measure of indebtedness, rose to 6.2% from 4.8% in the previous quarter. Free cash flow of $12.3 billion did not cover the dividend payout.