Aramco Q3 result: Profit rises 9% as refining, oil price drive earnings

Saudi Aramco posted a 9% increase in third-quarter profit after a jump in earnings from its refineries and as the Iran war drove oil prices higher.

Adjusted net income rose to $31.2 billion during the three months, from $28.6 billion a year earlier, according to a statement. That beat analysts’ profit estimates of $28.7 billion compiled by Bloomberg. The company maintained its base dividend at $21.9 billion on a quarter-on-quarter basis, a payout that’s key for Saudi Arabia’s public finances.

The higher earnings are a boon for the kingdom as it faces waves of attacks from Yemen’s Houthi militants that’s pressuring the economy and putting increasing focus on the strength of its oil revenue. Aramco, the world’s biggest crude exporter, is the lynchpin of Saudi industry, with revenue from energy sales and hefty dividend payouts supporting the kingdom’s vast spending needs.

The company’s oil selling price was about 35% higher in the quarter from a year earlier, while its earnings before interest and tax for downstream businesses, which include refineries and trading, jumped more than three-fold to a record of over $10 billion, Aramco said. Global oil majors from BP Plc to ExxonMobil Holdings Corp. and Chevron Corp. all benefited from surging refining margins during the quarter.

Brent crude in London surged more than 40% during the quarter to average over $90 a barrel as the ramp-up in Iranian attacks on shipping in the Strait of Hormuz raised supply concerns. By the middle of September, the global benchmark had topped $100 a barrel and rose further last month amid concern that fighting could break out again in the US-Iran war.

Aramco increased crude shipments from its main export hub at Ras Tanura on the Persian Gulf in September to regain market share among buyers in Asia. It pivoted to the route through Hormuz after the alternative through the Red Sea was disrupted following attacks on the East-West pipeline that temporarily took it out of service.

In recent weeks, Houthi attacks have targeted Aramco’s energy infrastructure, including Yanbu, where the East-West pipeline terminates, refineries in western Saudi Arabia, a major oil field and even the company’s headquarters. Despite the attacks, the kingdom has kept driving exports out to markets.

Aramco sold its oil at about $95.20 a barrel in the third quarter, compared with $70.10 a year earlier. Total liquids production dropped about 10% to 8.7 million barrels a day, while natural gas output dipped 2.6%.

The company’s gearing, a measure of indebtedness, eased to 5.5% at the end of September, from 6.2% at the end of June. Free cash flow — funds left over from operations after accounting for investments and expenses — of $28.2 billion covered the dividend payout.

Also Read: Fireside Ventures co-founder Vinay Singh departs from company after a decade-long stint