Aramco Q1 Profit Rises 25%

The company reported a 25% jump in first-quarter profit to $32.5 billion as the Iran war closed the Strait of Hormuz and drove up global oil prices. Its chief executive said the disruption has removed roughly 1 billion barrels from the global supply balance over the past two and a half months, with the market losing an additional 100 million barrels for each week the waterway stays shut.

The company shifted exports to its East-West Pipeline, which now runs at its maximum capacity of 7 million barrels per day to the Red Sea, bypassing the blocked strait. This rerouting has offset some of the net loss, which stands at about 880 million barrels after accounting for redirected flows and government strategic reserve releases, the chief executive stated.

Brent crude rose 2.58% to $103.91 per barrel on Sunday. That remains well above the roughly $70 level seen in late February before the conflict began on Feb. 28, though it sits below peaks above $119 reached during the fighting.

The chief executive told investors that the oil market will not normalize until 2027 if the Hormuz disruption continues past mid-June. Even if the strait reopened immediately, tanker repositioning and supply-chain recovery would still require several months, the executive added.

More than 600 ships, mostly oil and product tankers, are currently stuck in the Persian Gulf, with around 240 vessels waiting outside the strait. The global tanker fleet has become mixed up with vessels in the wrong locations after weeks of idling, complicating any return to pre-conflict traffic patterns.

Only two to five ships now pass through the strait daily compared with 70 before the war. About 20% of the world's traded oil typically flowed through the waterway prior to the conflict, along with large volumes of natural gas, fertilizer and other petroleum products.

Oil inventories are rapidly drawing down, particularly for products such as gasoline and jet fuel. The chief executive warned this could reach critically low levels ahead of the summer driving and travel season. The disruption represents the biggest energy supply shock ever recorded, according to the executive, with strain on global supplies intensifying daily.