Saudi Aramco Sees Stronger Oil Demand After Conflict as Inventory Rebuilding Looms

Saudi Aramco expects to benefit from a sharp increase in global oil demand once the current regional conflict ends, with the company saying countries and energy buyers will need to rebuild depleted inventories after months of supply disruptions through the Strait of Hormuz.

The outlook was outlined by Aramco Executive Vice President and Chief Financial Officer Ziad Al-Murshed following the company’s stronger-than-expected second-quarter financial results. Speaking to Asharq Bloomberg, Al-Murshed said the expected recovery in demand would be driven by the urgent need to replace oil stocks that have been reduced during the conflict.

“We are well positioned to benefit from the increase in demand,” Al-Murshed said, pointing to Aramco’s spare production capacity, strong financial position and one of the lowest gearing ratios among major global oil companies.

Aramco reported second-quarter net income of $33.4 billion, up 33 percent from the same period a year earlier and ahead of analysts’ expectations. Revenue climbed 28.1 percent year-on-year to $139.1 billion, reflecting higher energy prices and continued demand despite disruptions to global supply routes.

The company has repeatedly warned about the consequences of the prolonged closure of the Strait of Hormuz, one of the world’s busiest oil shipping lanes. Earlier, Aramco President and Chief Executive Amin Nasser said the conflict had removed an estimated 11 million barrels a day of liquid fuel supplies from the market, with more than 100 million barrels lost every week the waterway remained inaccessible.

Nasser cautioned that reopening the strait would not immediately restore normal market conditions. He estimated that rebuilding depleted inventories could take around 18 months, even if additional supplies of about 2.1 million barrels per day became available.

Despite attacks on Saudi energy infrastructure during the conflict, Nasser said Aramco had not suffered any material operational or financial damage. He credited the company’s resilience to its diversified export routes and ongoing efforts to identify additional shipping options that reduce dependence on the Strait of Hormuz.

Al-Murshed also highlighted the importance of Aramco’s extensive domestic supply chain, saying the company’s high level of local content enabled repairs to damaged facilities to be completed more quickly following recent attacks.

The executive also pointed to the company’s financial strength. Aramco generated a 22 percent return on investment during the 12 months ending June 30, which he said was the highest in the global oil industry and roughly twice the average of its international peers.

He added that the company’s gearing ratio declined to 6.2 percent from 6.5 percent over the past year, despite increased shareholder distributions and new debt issuance. According to Al-Murshed, maintaining lower debt levels during one of the most challenging periods for global energy markets demonstrates Aramco’s financial resilience and positions the company to respond quickly as oil demand recovers after the conflict.