Saudi Aramco profit rises 35% as higher oil prices lift revenue

Saudi Aramco, the world's largest listed oil company, is facing significant challenges despite posting higher profits in the third quarter. While the company reported a net income of $36.25 billion, adjusted net income only grew 9% to $31.20 billion, reflecting a decline of 6.6% from the previous quarter. These figures highlight that Aramco's profitability may not be sufficient to sustainably fund shareholder distributions, domestic investments, and maintain a resilient export system.

The company's financial performance must be viewed critically, as government fiscal demands continue to rise. The fiscal deficit is projected to reach SAR245 billion ($65 billion) in 2026, up from an initial estimate of SAR165 billion. These government projections, combined with Aramco's declining oil activities and increasing non-oil economic growth, underscore that higher oil prices do not guarantee economic strength.

The corporation is under pressure to balance between investment returns, operating costs, and cash generation, while also meeting the Kingdom's growing fiscal needs. Aramco's geographical challenges, including the strategic importance of the East-West Pipeline and the constraints of the Red Sea exports, further complicate its ability to meet these demands.

The company's strategic response, including the exploration of alternative export routes and storage capacities, signals a shift towards diversifying its operations, but this will not be a quick fix. Aramco must carefully navigate these financial and geographical challenges to ensure its long-term sustainability and resilience.