Aramco net income jumps in 1Q, courtesy of the East-West pipeline

Aramco posted strong growth in its bottom line in the first quarter, weathering regional headwinds and crediting alternative pipelines that bypassed Hormuz. Still, the oil giant cautioned the global energy markets are in for a rough period and years of recovery if the strait does not open soon.

By the numbers: Net income was up 25% y-o-y to USD 32.5 bn in the first quarter. Higher oil prices and refining margins helped Aramco offset the impact of supply disruptions and attacks on energy infrastructure across the region.

Behind the resilience was Saudi’s rerouting infrastructure, which spared it — and the global energy market — the worst of the negative impacts of the Hormuz disruption.

The East-West pipeline “has proven itself to be a critical supply artery, helping to mitigate the impact of a global energy shock and providing relief to customers affected by shipping constraints,” CEO Amin Nasser said in the earnings statement(pdf).

REMEMBER- The pipeline helped Saudi reroute more than 7 mn bbl / d at its maximum capacity reached in March, with some 2 mn bbl / d headed to refineries and 5 mn bbl / d for exports. It was briefly disrupted in part earlier in April when a pumping station was hit, but throughput was restored in a matter of days.

The world is still in for a painful hit. Some 1 bn barrels of oil were lost from the markets in the last two months, Nasser told Reuters. Restoring stability will take some time, and years of underinvestment in energy inventories have made things worse, Nasser argued.

How much time until recovery? It’s all about how long Hormuz remains shut. Reopening the strait today could mean markets are set to recover in a few months. “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 normalize only in 2027,” Nasser said in an emailed statement to Bloomberg.

Staying the dividend course: The company is distributing USD 21.9 bn for the first quarter, up 3.5% y-o-y, and in line with an expected total dividend of USD 87.6 bn for the whole year.

The fine print: Aramco’s gearing ratio — a measure of indebtedness — was back up to 4.8% by the end of the quarter, after declining to 3.8% at the end of last year. Freecashflow dropped to USD 18.6 bn, “impacted by USD 15.8 bn of working capital build,” the statement said.

What’s next?

The real pricing effect is yet to show up in the next quarter: Crude averaged USD 79.60 / bbl in 1Q, much higher than the USD 64.10 at the end of 2025 and slightly higher than USD 76.30 in 1Q 2025. Brent crude is currently trading close to the USD 100 / bbl mark, setting Aramco up for an even bigger windfall in 2Q.

^^ Aramco will have more to say in an analyst call today.