Saudi Aramco profit jumps despite war disrupting shipping routes

Saudi Arabian Oil Co., which is known as Aramco and is the world’s top oil exporter, posted a net profit of $32.5 billion for the three months ending March 31, up from $26 billion in the same period last year.

Oil prices have soared since Iran effectively closed Hormuz after the start of the war with the U.S. and its allies in the region on Feb. 28. Around a fifth of the world’s oil and gas passed through the waterway each day before the war. To partially offset the disruption to its traditional export route, Aramco is rerouting more of its crude to the Red Sea port of Yanbu via its East-West pipeline.

The East-West pipeline reached its maximum capacity of 7 million barrels a day during the quarter, proving itself to be a “critical supply artery,” Aramco President Chief Executive Amin H. Nasser said.

While higher oil prices are expected to offer an earnings tailwind to Aramco and other oil producers, the extent to which these companies are able to benefit ultimately depends on the reopening of the strait. The East-West pipeline can’t replace all the crude flows carried by tanker ships, but its use is helping prevent an even worse crisis from unfolding.

The East-West pipeline network is also tied to domestic refining hubs in the region. Close to 2 million barrels a day of the pipeline’s capacity feeds refineries on the west coast of Saudi Arabia, which supply both Saudi domestic markets and international buyers of refined fuels.

Oil futures ended last week with losses as a U.S. proposal keeps hopes alive for an end to the war with Iran and eventual reopening of the Hormuz strait.