Aramco’s refineries carried its profit as its oil output fell by a fifth from last year

Saudi Aramco reported third-quarter adjusted net income of $31.2 billion, up 9% from $28.6 billion a year earlier, even though its oil and gas output was lower. According to its results release and interim report, published on Tuesday, November 3, a refining profit that more than tripled made up the difference.

Less oil produced, a higher price per barrel

Aramco's total liquids production, which covers crude oil, natural gas liquids and condensate, was 8,695 thousand barrels a day in the third quarter, against 10,824 thousand a year earlier, a drop of 19.7% (computed). It was up 14.9% from 7,566 thousand in the second quarter (computed). Total hydrocarbon production was 11.0 million barrels of oil equivalent a day.

The average realized crude oil price was $95.2 a barrel, against $70.1 a year earlier, an increase of 35.8% (computed). It was below the second quarter's $108.1, a fall of 11.9% (computed).

Upstream adjusted EBIT, or earnings before interest and tax, was $46.8 billion against $51.5 billion a year earlier, a decline of 9.1% (computed). The report attributes the decline to lower crude volumes sold and higher production royalties, partly offset by higher crude prices.

Refining supplied the growth

Downstream adjusted EBIT rose to $10.3 billion from $3.1 billion in the third quarter of 2025, an increase of 234.0%, which Aramco attributed to stronger refining margins. Downstream made up 18.0% of the two segments' combined adjusted EBIT, against 5.7% a year earlier (computed).

The company said that during the quarter and afterward, certain facilities of the company and its affiliates in Saudi Arabia were targeted in attacks. As of September 30 it did not expect the impact to be material to its financial position, results or cash flows, and it said it would keep assessing the events. Chief Executive Amin Nasser said in the release: "Geopolitical uncertainty and attacks on key energy facilities continued to amplify the global energy supply crisis in the third quarter of 2026".

Net income and adjusted net income tell different stories

Net income was $36.3 billion, up 34.6% from $26.9 billion a year earlier (computed). Aramco said the rise included the recognition of a gain on the sale of its equity stake in the PRefChem refining joint venture, which it sold to Petronas, with the sale closing in September. The report puts the gain at 25.9 billion riyals, or $6.91 billion.

Adjusted net income, a non-IFRS measure that Aramco uses to exclude such items, fell 6.6% from the second quarter's $33.4 billion (computed).

Cash, spending and the dividend

Cash flow from operating activities was $38.7 billion against $36.1 billion a year earlier. Capital expenditure was $10.5 billion, down from $12.6 billion (16.2%, computed), and free cash flow, a non-IFRS measure defined as operating cash flow less capital expenditure, was $28.2 billion against $23.6 billion.

The board declared a base dividend of $21.9 billion for the quarter, up 3.5% from a year earlier, to be paid in the fourth quarter. Free cash flow covered it about 1.3 times (computed). The gearing ratio, net debt as a share of equity plus net debt, was 5.5% on September 30, against 6.2% at the end of June.

Aramco also said it closed the purchase from PIF of a 49% stake in the AI company HUMAIN in November, with a transfer of AI assets and about $2.6 billion in cash contributions.

A profit that depends on refining margins, not on barrels

We think the quarter shows how much of Aramco's profit now depends on the price of refined products rather than on the barrels it pumps. Upstream earnings fell on lower volumes, and the report names refining margins as the reason downstream earnings more than tripled. In our reading, a company that cut its capital spending by 16.2% while producing a fifth less oil is being paid for scarcity.

That is both a threat and an opportunity. If refining margins narrow, we expect adjusted net income to fall back toward the upstream result, which was already lower than a year ago. If output recovers, as the 14.9% rise from the second quarter suggests, the higher crude price would add to refining earnings rather than replace them. We would watch the fourth-quarter refining margin and output figures, and our view would change if upstream earnings rise without help from downstream.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.