Besieged by war, Saudi Aramco continues to gush profits

Saudi Aramco, the world's largest oil company, has demonstrated remarkable resilience in the face of the ongoing war with Iran. Amid attacks on its facilities and disruption to shipping routes through the Strait of Hormuz, Aramco has maintained its impressive financial performance. In the quarter ending September, the company reported an adjusted net profit of $31 billion, marking a 9% increase compared to the previous year.

Despite previous attacks, including strikes on storage facilities in Jeddah and the East-West pipeline, Aramco has managed to adapt and continue its profitable operations.

Since the conflict began in February, Aramco has shifted its focus to the Red Sea and the Suez-Mediterranean pipeline to bypass the Houthis' blockade of the Bab al-Mandab Strait. This strategic adjustment has resulted in an increase in oil shipments to market, reaching around 7 million barrels a day last month, compared to just 4.5 million barrels in July and a near-record level in February.

Aramco's ability to navigate through the conflict is further enhanced by its strong profit margins. The upstream costs per barrel, including operating and capital expenditures, last year amounted to just $11.50, a fraction of the $95 per barrel fetched in the recent quarter. Furthermore, the cost of repairing damaged facilities has been relatively modest, with capital expenditure in the first nine months of 2026 declining by 4% compared to the previous year.

However, increased shipping costs have become a challenge for Aramco. The International Energy Agency reports that shipping oil from the Persian Gulf to Asia is now five times more expensive than before the war, due to the reduced availability of tankers and the need for ship-to-ship transfers in the Gulf of Oman. Additionally, vessels destined for Asia must often circumvent the Cape of Good Hope, adding to the transportation costs.

To offset these challenges, Aramco has been exploring new export routes. One option involves expanding the East-West pipeline, while another includes developing a pipeline from Saudi Arabia's eastern oilfields to Duqm in Oman. This pipeline could cost up to $7 billion, equivalent to 14% of the company's annual capital expenditure budget.

Another possibility is restoring the Iraq-Saudi pipeline, which would connect Basra in Iraq to Yanbu on the Red Sea. While Aramco believes that such investments would quickly pay off if oil prices remain high and alternative export routes remain unreliable, the company must also consider the potential disruption caused by the end of the conflict with Iran.