Saudi Aramco Posts 33% Profit Surge as Hormuz Crisis Drives Oil Prices to Record Premiums
The oil giant reported H1 2026 adjusted net income of $33.4 billion amid what CEO Amin Nasser called 'the biggest ever energy supply shock in history.'
Record Profits Amid Historic Supply Disruption
Saudi Aramco reported second-quarter adjusted net income of $33.4 billion, up 33% year-over-year, as the prolonged U.S.-Iran conflict in the Strait of Hormuz created what CEO Amin Nasser described as "the biggest ever energy supply shock in history" (earnings call, 2026-08-04).
The crisis has removed an average of 11 million barrels per day of liquid supply from global markets, according to Nasser, driving Aramco's realized crude prices to $108.1 per barrel in the quarter—a 62% increase year-over-year. The company achieved a record premium of more than $10 per barrel over Brent crude.
Operational Flexibility Delivers Results
Despite production volumes declining to 9.5 million barrels of oil equivalent per day, Aramco's upstream adjusted EBIT rose 14% year-over-year to $50.9 billion in Q2. The company leveraged its East-West Pipeline to bypass the Strait of Hormuz, maximized throughput from West Coast refineries, and deployed more than 3,000 trucks to maintain local refined product supply.
"We have demonstrated great agility and adaptability in the face of threats and attacks on our facilities," Nasser said, noting that the company restored assets "6x faster than industry peers as verified by third party consultant" (earnings call, 2026-08-04).
Downstream operations performed exceptionally well, with Q2 adjusted EBIT of $6.2 billion—nearly double the year-ago level. For the first half, downstream adjusted EBIT reached $11.7 billion, up 144% year-over-year.
Inventory Depletion and Market Outlook
The company highlighted severe depletion of global oil inventories as a critical concern. CFO Ziad Al-Murshed noted that commercial and strategic reserves have been drawn down by an estimated 600 million barrels between May and July, with the U.S. Emergency Industrial Alliance release program of 426 million barrels ending in August.
"Demand remains strong and has not been met by supply in the first half of this year, but rather from commercial and strategic inventories," Nasser warned. He estimated that if the Strait of Hormuz were to open immediately, "it would take up to 18 months at an average rate of 2.1 million barrels per day to replenish depleted inventories on top of demand" (earnings call, 2026-08-04).
Flows through the Strait of Hormuz currently stand at just one-tenth of pre-conflict levels, according to the company.
Financial Strength Maintained
Aramco maintained what it called "the strongest balance sheet in the industry," with gearing of 6.2% and 12-month rolling return on average capital employed (ROACE) of 22.1%—approximately double the integrated oil companies' average (earnings call, 2026-08-04).
Free cash flow excluding working capital movements reached $25.9 billion in Q2, up 42% year-over-year. The company increased its Q2 base dividend by 3.5% year-over-year, though specific figures were not disclosed in the excerpt.
Al-Murshed explained that working capital movements in the quarter related to a "specific effect" from the price equalization mechanism with the Saudi government, which he characterized as "just a timing issue" expected to reverse in Q3.
This article was generated by MarginX from the earnings call on 2026-08-04. It is not investment advice.