Aramco rides an oil shock it is still fighting

Saudi Aramco is benefiting from the same global oil crisis that has disrupted its production, damaged its facilities, and forced it to rethink how it gets crude to market. Higher oil prices and record refining margins drove stronger 3Q earnings at the world’s largest oil exporter, even as the conflict constrained its operations. Net income rose 34.5% y-o-y to USD 36.3 bn in 3Q 2026 on a revenue increase of 20.3% to USD 123.8 bn, according to its earnings release (pdf).

The biggest buoy? Oil prices. Aramco’s average realized crude price climbed to USD 95.2 a barrel from USD 70 a year earlier, though it slipped from USD 108 in 2Q. That helped soften the blow from lower volumes: total liquids production averaged 8.7 mn bbl / d against 10.8 mn a year earlier. This came as the war’s blockades, strikes, and tensions continued restricting output and shipments.

A flatter factor also helped: Aramco’s reported earnings were lifted by the sale of its 50% stake in Malaysia’s PRefChem refining and petrochemicals ventures to Petronas. CFO Ziad Al Murshed told analysts the disposal added around USD 7 bn to unadjusted net income in the quarter. Adjusted net income, which strips that out, rose a more modest 9% to USD 31.2 bn, still edging past the USD 30.7 bn median analyst estimate.

Refining carried the rest: Aramco’s downstream division generated a record USD 10.3 bn in adjusted earnings before interest and taxes (EBIT), up 234% y-o-y and more than USD 4 bn above the previous quarter. A shortage of refined products, particularly diesel and jet fuel, caused a sharp rise in global refining margins. Routing 51% of its crude into its own downstream operations allowed Aramco to capture more of those margins than it could from crude exports alone. Upstream was less fortunate: adjusted EBIT fell 9% y-o-y to USD 46.8 bn on lower volumes.

But emergency measures can only go so far. CEO Amin Nasser told investors on Tuesday’s earnings call that the global oil supply shortfall remains substantial despite emergency stock releases and alternative export routes, with inventories running low and possibly needing years to rebuild. “The world is starting the ninth month now of a historically unprecedented supply shock,” Nasser said. More than 3 bn bbl of liquids supply have been lost since the conflict began, with alternative routes, strategic reserve releases, and demand management narrowing the cumulative deficit to around 2 bn barrels, he said. The rest has been covered mostly by commercial inventory withdrawals and reduced consumption — measures Nasser said cannot run indefinitely. Even if normal flows resumed immediately, refilling depleted inventories could take up to two years.

Shipping is the other bottleneck. Longer voyages, tanker shortages, and attacks on vessels have cut the effective capacity of the global oil tanker fleet by around 40%, Nasser said. Rerouting has reduced fleet efficiency by about 25%, with attacks accounting for a further 15%, and freight costs have risen to roughly 15 times pre-conflict levels.

Aramco kept crude moving where it could, leaning on its East-West Pipeline, Mediterranean export links, and ship-to-ship transfers outside the Strait of Hormuz. Those measures lifted production by around 1.1 mn bbl / d from 2Q, and September was the strongest month since the conflict began.

The nine-month read: The bottom line expanded 34.2% y-o-y to USD 101.5 bn and revenue rose 15.2% y-o-y to USD 359.5 bn on the higher oil price.

Spending and payouts stayed on plan

The dividend remains covered. Freecashflow rose to USD 28.2 bn from USD 23.6 bn a year earlier, comfortably covering the quarterly base dividend of USD 22 bn and taking 9M base dividends to USD 65.7 bn — the payouts that fund a large share of the Saudi state budget. The dividend rose 3.5% y-o-y and is due on 25 November.

The balance sheet also improved. Gearing fell to 5.5% at the end of September from 6.2% three months earlier, while Aramco had repurchased 83.8 mn of its own shares worth USD 610 mn under the buyback approved in March.

And Aramco kept its 2026 capital investment guidance at USD 50-55 bn, even after the Humain contribution and the cost of restoring damaged infrastructure. Nasser said lower-than-planned output had trimmed some spending needs, letting the company fit the extra costs inside its existing budget. Capital spending is still expected to peak around the middle of the decade, with 2027 guidance due in March.

What it’s building with the money

Aramco kept investing beyond the core through the quarter, advancing the Jafurah gas development, the Fadhili expansion and the Dammam phase-two project, part of a push to lift sales-gas capacity by roughly 80% by 2030. More recently, the Zuluf crude increment started up in October and is expected to reach processing capacity of up to 600k barrels a day by year-end.

IN CONTEXT- The gas buildout has an oil payoff. Because Jafurah produces non-associated gas, Aramco can add gas without pumping more crude — flexibility that helped shield domestic supply when the Kingdom curtailed oil output during the conflict. The program is also meant to free up crude the Kingdom now burns for power, displacing about 500k barrels a day at peak that could instead be exported. We broke down the interplay here.

That push now extends to AI... Aramco just took a 49% stake in PIF’s AI firm Humain, investing roughly USD 2.6 bn. “The transaction will further accelerate Humain’s growth and advance its full range of AI capabilities globally, with PIF and Aramco contributing AI assets, capabilities, and talent,” Aramco told EnterpriseAM. On the earnings call, Nasser said the investment would give Aramco access to computing infrastructure and AI models, create new demand for Saudi gas and electricity, and open fresh revenue streams.

…and minerals: The oil giant signed a hard-rock mining JV with Maaden targeting copper and rare earths across nearly 10% of the Kingdom’s land. It also contracted Nesr for a lithium demonstration project.

Looking ahead

A bigger Hormuz bypass is on the table. Aramco is carrying out engineering work to expand its East-West Pipeline, working to lift east-to-west capacity beyond 7 mn bbl / d, Nasser said. Energy Minister Prince Abdulaziz bin Salman said last month that the Kingdom aims to reach 10 mn bbl / d, a target Nasser did not confirm. “We are looking at other routes, but until we get … to final investment decisions, we are not going to announce what we are doing,” he told analysts. The economics have already shifted: Nasser said the pipeline’s entire original construction cost was effectively recovered in about 15 days during the current disruption.

If needed, Aramco can ramp up fast: The company can restore output to pre-conflict levels within days and reach its maximum sustainable capacity (MSC) of 12 mn bbl / d in under three weeks, Nasser said, and it can go beyond that ceiling. However, “this is not for the company to decide on expanding the MSC,” he clarified. “It is for the government.”

What to watch: Whether Aramco can sustain higher production and export volumes while attacks, shipping restrictions and rising freight costs keep complicating deliveries. The company expects the oil market to stay tight even if the conflict eases, with depleted inventories adding to crude demand over the next two years. For Aramco, that leaves an unusual combination of opportunity and risk: higher prices and refining margins are supporting earnings, while getting enough oil to market remains the biggest obstacle to capturing the full benefit.