A sharp rise in refining profits compounded a sharp rise in oil prices. Saudi Aramco's Q3 profit increased 9% and maintained dividends of US$21.9 billion

The Zhitong Finance App learned that Saudi Aramco's profit increased 9% in the third quarter due to a sharp jump in refining business profits, while the war in Iran boosted oil prices. According to the company statement, adjusted net profit for the quarter (three months ending September) rose to US$31.2 billion from US$28.6 billion in the same period last year, a figure higher than analysts' estimates of US$28.7 billion. The company maintained its underlying dividend of $21.9 billion on a month-on-month basis, a dividend critical to Saudi public finance.

The rise in profits is a big plus for the Kingdom. The country is facing multiple rounds of attacks by the Houthis in Yemen. As a result, the economy is under pressure, and market concerns about the stability of its oil revenues are also rising. As the world's largest exporter of crude oil, Aramco is the backbone of Saudi industry — energy sales revenue and high dividends support the country's huge spending needs.

Aramco said that oil sales prices rose about 35% year over year during the quarter; downstream sector profit before interest and tax (EBIT), which includes refineries and trading businesses, more than tripled, reaching a historical record of more than 10 billion US dollars. This quarter, global oil giants, from British Petroleum to ExxonMobil and Chevron, all benefited from a sharp rise in refining profit margins.

London Brent crude rose more than 40% during the quarter, averaging over $90 per barrel as Iran's escalating attack on Hormuz shipping raised supply concerns. By mid-September, the global benchmark oil price had broken through $100 per barrel and rose further last month. The market feared that the war between the US and Iran might break out again.

In September, Aramco increased crude oil shipments from Rastanura, a major export hub in the Persian Gulf, to regain market share among Asian buyers. Previously, the east-west oil pipeline was attacked and stopped for a while, causing the alternative route through the Red Sea to be blocked, and the company relied instead on the route through the Strait of Hormuz.

In recent weeks, Houthis attacks have targeted Aramco and American energy infrastructure, including Yanbu, the end point of the East-West oil pipeline, a refinery in western Saudi Arabia, a large oil field, and even the company headquarters. Despite the attacks, Saudi Arabia continues to export crude oil to the market.

Aramco's average crude oil sales price in the third quarter was about $95.20 per barrel, compared to $70.10 per barrel in the same period last year. Total liquid production fell by about 10% to 8.7 million b/d, and natural gas production fell 2.6%.

The leverage ratio, which measures debt levels, fell from 6.2% at the end of June to 5.5% at the end of September. Free cash flow — funds left over from operating activities after deducting investments and expenses — was $28.2 billion, enough to cover this dividend payment.