Welcome to the Saudi Aramco's Q1 2026 Result Call. We will be holding a question-and-answer session following the presentation. If you'd like to ask a question, please press star followed by 1 on your telephone keypad at any time. I shall now hand over to Mr. Peter Hutton to begin.
Hello, and welcome to Saudi Aramco's Q1 2026 earnings call. I'm Peter Hutton, head of investor relations at Aramco, and I'm pleased to be joined today by Mr. Amin Nasser, President and CEO, and Mr. Ziad Al-Murshed, Executive Vice President and CFO. Today, we will provide a detailed update followed by a question-and-answer session. We expect the call to last around an hour. Please refer to this cautionary statement on forward-looking information, our regulatory filings, and our website for more details. With that, I hand the call over to Amin.
Thank you, Peter, and welcome everyone and thank you for joining us. Before highlighting the very strong operating and financial performance which Aramco delivered in the Q1, I would like to comment on the regional landscape. The energy supply shock that began in the Q1 is the largest the world has ever experienced. By this, Aramco delivered with a high level of resilience underpinned by decades of long-term strategic planning, design flexibility in both our domestic and international assets and operational excellence. We have been able to take timely action thanks to years of contingency planning, our focus on safety, and the ability of our people to adopt new solutions, as I will outline. We acted quickly, as highlighted in our recent earnings call in March.
The company's flexibility is a key lever in our risk mitigation and business continuity, enabling Aramco to optimize crude production across our portfolio. For example, to prioritize lighter grades and maximize production from key assets. The East-West Pipeline was a major strategic investment conceived almost five decades ago. In both maintaining it to the highest standard and ramping this up to capacity of 7 million barrels per day, Aramco managed to transform around 80 years of supply and export operational modes in just eight days. We have further increased our ability to meet deliveries. For example, by utilizing new crude export outlet at Rabigh and repurposing infrastructure to supply crude from West Coast refineries. The strategic decision taken more than a decade ago to localize our supply chain provides an exceptional ability to respond quickly.
We were able to restore Hawiyah gas plant operation in less than 24 hours and brought Khurais facility back online in less than two days. Around 99% of the materials used to restore disruptions to operations have been sourced through our local supply chain. Without this, lead times would typically have been four to 12 months. This resilience is equally applicable in gas. With the decision to invest in significant storage allowed sales gas to be delivered to customers even during disruptions at some facilities. Throughout the conflict, we have continued to learn lessons, review and adapt. This is a key part of our corporate philosophy to improve every element of our business and make us stronger than ever before. Where we have reduced production on some fields, we have been able to resume previous production volumes within days.
This reflect the way we manage fields and our highly advanced monitoring as part of the 10 billion data points per day we track across our operations. If required, our demonstrated experience in increasing production indicates we can expect to reach our maximum sustainable capacity of 12 million barrels per day in less than three weeks. The macro environment is fast-moving, characterized by many moving and uncertain parts. The global economy remains resilient, with the latest Q1 world GDP growth estimates at 2.7%, relatively unchanged since the conflict. For full year 2026, the GDP growth outlook is down slightly at 2.4%. The severe supply disruptions has starkly underlined the central importance of oil and gas to the world. This is a supply-led, not a demand-driven crisis.
The market has seen an unprecedented supply loss of about 1 billion barrels of oil that was partially offset mainly by alternative flows bypassing Hormuz, Strategic Petroleum Reserve released by governments, and the utilization of Aramco's East-West Pipeline to divert the oil deliveries. Despite higher prices, there has not been increased production from outside the Arabian Gulf. If the Strait of Hormuz opens today. It will still take months for the market to rebalance, and if its opening is delayed by a few more weeks, then normalization will last into 2027, further amplifying our consistent view of the need to restore materially depleted inventory levels. Tightness in physical markets is evident in stronger refining margins across key regions and refined products, especially diesel and jet fuels.
Demand remains healthy as we head into the second half of the year, underpinned by aviation demand, strategic reserve replenishment, and the upcoming driving season. It's also very clear that there continues to be a robust demand for crude and the need for strong supplies of low-cost, lower carbon intensity barrels. Aramco is well-positioned to navigate this environment, supported by our attractive and highly demanded crude slates. Our flexibility and operation resilience enable us to meet customer expectations while reinforcing the critical importance of stable crude supplies in a volatile landscape. Despite the significant activity and focus on delivering effectively in these present circumstances, our long-term strategy remain on track and our financial even more robust. Our major projects are progressing well, including Jafurah Phase 2, which is on schedule for completion in 2027. This will add to our strong gas growth momentum.
We delivered a strong and peer-leading start to 2026, with Q1 adjusted net income of $33.6 billion, $18.6 billion free cash flow, and a ROACE of 20.7%, which is around double the IOC's average. We produced 12.6 million barrels of oil equivalent per day, up 0.3 million barrels year-on-year. With lifting costs at $3.5 per barrel, we are 50% lower than the IOC's average and continue to drive cost leadership and generate robust cash flows. It's worth noting that we still have available capacity and under our rule-of-thumb analysis, every million barrels per day could add around $10 billion-$11 billion in annualized operating cash flow based on 2025 average Brent prices.
Our gas pro-program remains on track to deliver around 80% sales gas production capacity growth by 2030 compared to 2021 levels, which we expect to contribute $12 billion-$15 billion in incremental operating cash flows subject to demand. In downstream, we maintained our high availability and throughput, allowing us to maintain an optimal proportion of our crude utilized within our downstream system and capture strong refining margins. Our integration and transformation programs are on track to unlock value, supporting the goal of $8 billion-$10 billion in incremental operating cash flow in 2030, with the aim of up to 4 million barrels per day of liquid-to-chemical capacity in petrochemical-producing complexes in the long term.
Our continued delivery to our customer and investors underpin our confidence in delivering long-term shareholder value with our sustainable and progressive base dividend and the $3 billion share buyback announced in March, which also supports our employees' share purchase plan. Our technology and AI capabilities, where we have captured $11.3 billion in technology-realized value since 2023, and our supply chain resilience and our lowest upstream carbon intensity in the industry underscore our strategic focus and reinforce Aramco's position as a leader in the industry with a strong outlook for the future. Let me hand over to Ziad to highlight how our Q1 results underpin this position.
Thank you, Amin, and welcome everyone. Amin has talked in some detail about the high quality and flexibility of our operations and long-term perspective. Our financial strength matches and supports those attributes and advantages. We have the strongest balance sheet in the sector with an exceptionally strong cash position of $ 75.2 billion and a balance sheet gearing ratio of just 4.8% at the end of Q1, the lowest versus our peers. Even with a strong investment program underway, our capital spending as a percentage of operating cash flow remains the lowest among our IOC peers. That's a clear sign of our efficiency and disciplined approach to capital allocation. Aramco offers investors earnings visibility with high returns on capital.
Our 12-month rolling ROACE was 20.7%, and our rule-of-thumb analysis on potential impact of price and volumes provides a welcome predictability, especially in uncertain times. We continue to add new funding sources to our existing instruments, including bonds, Sukuk, and commercial paper to further strengthen our financial agility. We took advantage of favorable market conditions with our $4 billion bond issuance in February at attractive prices, demonstrating strong investor confidence in our outlook. Our Q1 base dividend is up 3.5% year-on-year and will be paid on the 9th of June. That's an increase of 17% over the past four years.
In addition to this base dividend growth, which is expected to be up $3 billion in full year 2026 versus 2025, we will also continue our $ 2 billion-$3 billion share buyback program for our employee share purchase plan, which was commenced in March. Our performance-linked dividend provides a clear mechanism to share upside with shareholders. Our Q1 adjusted net income was $33.6 billion, up 34% by $8.5 billion compared to last quarter, up 26% by $7 billion versus a year ago. This 26% increase year-on-year is despite realized prices being effectively the same and reflects the high performance and delivery from both the upstream and the downstream. Upstream adjusted EBIT was $54.2 billion, up $2.8 billion year-on-year, mainly from higher volumes.
Quarter-on-quarter adjusted upstream EBIT was $6.3 billion higher due to a 20% increase in realized prices, which reflected effectively two months of lower prices before the increases in March, partially offset by lower volumes. Our downstream delivered exceptional performance with adjusted EBIT of $5 billion, up by $3.6 billion or more than three times year-on-year, reflecting higher refining margins, higher trading performance, and also the effectiveness with which we were able to continue to deliver volumes to our customers. Quarter-on-quarter adjusted EBIT was up more than 60%, reflecting improved refining and chemical margins and strong trading results. Free cash flow was $18.6 billion, even after a $15.8 billion working capital build, largely from higher prices. Importantly, the $34.4 billion free cash flow, excluding working capital movement, was up 62% year-on-year.
Now, before we move to Q&A, I want to leave you with a reminder of our unmatched free cash flow generation capability, even as we invest around twice that of our nearest peer. More than 60% of our operating cash flow in 2025 was available for shareholder distributions and external investments. This is the highest cash availability of any of the IOCs, and we do this while maintaining the lowest balance sheet gearing in the peer group. The current crisis further underscores the vital role of oil and gas in global economic activity and the importance of sustained investment in the sector to ensure reliable supply and stable inventories over time. Aramco is uniquely positioned with a robust reserves base of approximately 250 billion barrels of oil equivalent and a long-standing record of successfully maintaining and replacing reserves.
As the reserves of our peers have declined, this level is now around five times the total of those IOCs combined, up from 3.5 times in 2018. While we have visibility on our reserves for decades into the future, we believe many other industry players will face significant calls on their cash to replace or acquire reserves, and even these do not meet the needs for the industry as a whole. Again, this is the kind of long-term advantage and perspective which Aramco offers its shareholders, which does not seem yet to be fully recognized by investors. With that, thank you for your attention. Amin, Peter, and I are now pleased to take your questions.
To ask a question, please press star followed by one on your telephone keypad. To withdraw your question, please press star followed by two. When asking a question, please ensure that you are unmuted locally. I shall now hand back over to Mr. Hutton.
Thank you very much. Our first question comes from Iyad Ghulam of SNB. Go ahead, Iyad.
[Non-English content] congratulations on the strong results in Q1. I have two questions. The first one is, how do you see the macro environment and what would be the impact on the oil market in the short term and long term, given the closure of the Strait of Hormuz? The second question is, what lessons has Saudi and Aramco in general learned from this crisis? Thank you.
Thank you, Iyad for your questions. As you know, the disruptions faced in shipping by the Strait of Hormuz has caused the biggest ever energy supply shock in history.
Already it has resulted in a loss, as I said before, of almost 1 billion barrels of oil and has severely hurt a number of critical industries such as agriculture, semiconductor mobility, and as well as petrochemicals. The supply loss has been offset by Aramco's East-West Pipeline export and global strategic reserves and commercial inventories. They have helped to offset the net loss of around 880 barrels. If the current disruptions continue at this rate, the market will lose around 100 million barrels for every week the Strait of Hormuz remains closed. The loss will have to be covered by onshore inventories and the only buffer that is available today in the system. Let me add that the aggregate inventory level globally are not a proper reflection of the current physical market tightness that we see.
We need to look into inventories by region, by product, and what is realistically available without pushing the inventory system into operational distress. What we see from third-party estimates that shows that a fraction of these aggregate inventories to be effectively accessible. The rest is locked up in pipeline fills, minimum tank levels, and other day-to-day operational constraints. The drawdown from onshore inventories is rapidly accelerating today, notably for refined products including gasoline and jet fuel. As you know, this may reach critically low level ahead of the summer driving and travel season. There is an apparent disconnect between futures and physical markets as evident in the strong refining margins that reflect the market tightness that we see today. The longer the supply disruptions continue, even for another few more weeks, it is going to take much longer time for oil market to rebalance and stabilize.
It could drag on to 2027 to return to normal levels. All it takes for that to happen is another shutdown if you take it from the 5th of May, another six to eight weeks, middle of June to drag it into 2027. The supply disruption has led to demand rationing and a wide range of forecasts are indicating demand growth this year at around 700,000 - 900,000 barrels a day. We anticipate demand rationing to continue as long as supply remains disrupted via the Strait of Hormuz. However, if and when normal trade and shipping resume, we anticipate a very robust return to demand growth significantly higher than the initial estimate for the growth in 2026. The urgency to ensure security of supply will lead to rapid restocking and rebuilding of strategic reserves and commercial inventories.
A lot of drawdown on these inventories. They need to be refilled by companies and industries and by governments. At the same time, the supply chain has been drastically affected. There used to be about 70 vessels a day moving through the Strait of Hormuz. We are down to two to five these days. Tankers are currently idling, prevented from leaving or entering the Strait of Hormuz. The tankers today, if you look at them, they are stationed, some of them outside Hormuz. If I look at the total tankers within the Hormuz, inside the area, you're looking at over 600 vessels there. Majority are oil and products, but some other commodities. Outside, there is also approximately 240 waiting outside. They cannot be waiting forever. You know, we are almost three months now. Some of them patiently waiting for a long time.
The concern is some of them will start leaving to other locations because they cannot stay idle for a long time. They are mixed up and some of them in the wrong places. Even in the most optimistic scenario, energy and commodity supply chains will need several months to return to the pre-conflict traffic as vessels reroute or avoid being idle. The global oil supply challenges will continue and the strain intensifies with each passing day. However, for your question with regard to the lesson learned from this conflict, one core lesson is clear for us that resilience cannot be built in the moment. It is engineered years in advance. Beyond operational excellence, true resilience is demonstrated by the ability to absorb shocks, maintain continuity, and execute with strength through disruptions and only validate under real stress. We have demonstrated this.
The East-West Pipeline, which as I highlighted earlier, was conceived almost five decades ago, will maintain over the years, although not fully utilized. This investment paid off as we were able to increase the flow to 7 million barrels in just eight days. Imagine you just change the whole thing and reroute all tankers and avail that much through the East-West Pipeline in eight days. Of course, we have learned a lot from the attack on Abqaiq and Khurais in September 2019. When we maintained our ability to meet our customers' needs through swift execution of emergency response plans, and we were able to meet our requirement within 11 days by putting the full production back on.
Another area where we have invested, and that's in land, is we have 2018, we built one of the biggest gas storage in globally, which became very handy during this situation. When you have to shut down certain plants for whatever reasons, attacks, incidents or whatever, you can reproduce gas from these facilities. It paid off also as an investment for us. We did that, we did the engineering for that in 2018. It's on service right now. Building on the scale and quality of our infrastructure, our 70% local content of our 10-year iktva program and strategic inventory, almost 99% of items that we used for restoration following the current attacks have been sourced through our local supply chain.
We would have been delayed for months, not years, if the restoration elements that we needed were not available and handy within the Kingdom. Those who have not invested in the infrastructure, and when I say about infrastructure, it is the design basis. How is the plan designed, and what is the spacing between vessels? What is the contingency and the flexibility within the existing plans between trains and vessels and pumps and compressors? All of this helped a lot in addition to our investment in people and systems to respond effectively. Without it, we had run the risk of being seen as less reliable to our long-term partner, and this has a strategic and financial implication for us.
Another lesson is the reminder of the central importance of stability in the oil and gas supplies and the need for sufficient inventory by governments and as well by industries to minimize near-term disruptions. Beyond this, we believe that the industry needs to address its declining reserves, and we'll have to divert cash to achieve this. Our 250 billion barrels of reserves add further to our resilience attraction, and we believe as well value to Saudi Aramco. Thank you.
Thank you, Iyad. If I move on to our next question, which comes from Michele Della Vigna at Goldman Sachs. Michele?
Thank you very much. Really congratulations on such strong results in a really challenging environment. There were two questions I wanted to ask. First, I wanted to come back to the vision that you clearly laid out of how this resilience has been built over a decade plus of planning and investment, and we see the value of those results today. I was wondering, looking forward, what are the next steps that you want to take to continue to increase this resilience in years to come? Would this be a debottlenecking of the East-West Pipeline? Would this be about further increasing the storage of both oil and gas? I was just wondering if any of these potential investments are becoming increasingly attractive in the current environment.
My second question, which comes back to your very strong downstream results, which come from the flexibility of your refining system, is how much can you maximize jet fuel exports at a time when some of the global markets, especially Europe, is heading towards extreme physical tightness by the middle and the end of the summer? Thank you.
Thank you, Michele. You know, you are right with regard to what we have done to increase our resilience. As you know, we are a learning organization and are always looking for ways, large and small, to improve further. While we are currently in the middle of a crisis, our strategy team continues to develop our contingency plan for different scenarios to further strengthen our reliability and operational flexibility in different environments. We have subject matter experts in different organizations. All what they are doing today is what else that we can learn more about, and how can we increase our resilience in the mid to long term, considering what happened. This is a completely different crisis. The length of the crisis in terms of the interruptions combined with the number of attacks on facilities.
There is a lot of things that is currently be going on in terms to increase this resilience. We have a huge network that gives us the flexibility to connect, in some cases, adapt our assets to capture these opportunities. We have demonstrated this long-term strategic foresight and ability to adapt to these new solutions. A good example, as you highlighted, is East-West Pipeline. It's conceived almost five decades, you know. Maintained in a good and excellent order, where we had to bring it to a maximum capacity in eight days only. There is also the flexibility in the way we design and operate our oil and gas assets.
Good example is what we have done in terms of gas storage. The biggest in the world gas storage facilities that we have built became very handy during the situation that we are in right now. We are capitalizing also on AI and investment in AI to increase our resilience. The big factor that really, as I highlighted earlier, local content. It is really allowed us 99%, they say, of the material were sourced from within the Kingdom to do the fixes that we needed during this crisis. Our investment in creating another terminal other than we have north and south terminals. The south terminal was put on stream in 2019. Our refining assets also and storage across Asia, U.S., Europe, and in the Middle East really helped a lot in this situation.
We're talking about also your question with regard to refining. We are maximizing exports, capitalizing on our refinery in the east to supply the local market. Our refinery in the west, western region is handling some of the local market that good number of them are exporting. We are looking at significant export of products from the existing refinery that we have in the western region. We are capturing the margins as a result of these export facilities that we have in the western region and meeting the demand for the Kingdom, majority relying on the eastern part of the Kingdom in terms of supplying the market here. We are tapping into meeting our customer requirement in terms of different products by maxing our refinery in the western region.
We have good number with them, in addition to some of them with partners, Jizan, SAMREF, YASREF. You have Yanbu. You have Turath. There is so many refineries in the western region that we're tapping into at maximum.
Thank you, Michele. The next question is from Martijn Rats at Morgan Stanley. Hi, Martijn. Go ahead.
Yeah. Thanks for taking my question. Let me just reiterate Michele's point that these are very impressive results under very difficult conditions. Yeah, huge respect for that. I want to ask you two things. On the comments that it will take, like, until later this year, if this closure lasts longer, it might take into 2027 before a full supply from the region is restored. Can I ask you to kind of talk to us about the sequencing of that? Exactly what are the things that are on the bottleneck? Is it tankers? Is it facilities restart? Is it refinery repair? What makes it such an extended period?
What in the sequencing, you know, what are the things that, that we should be, you know, looking out for as sort of items to watch? Then also, I just wanted to ask you, if we end up in a situation where the closure does last longer, are there things inside Aramco, operational things, where you would say, "Yeah, so far we've been able to manage, and if it lasts a bit longer, it's okay." At some point, it sort of goes into another regime where a new set of problems emerge. Maybe not, but I just wanted to make sure I've sort of covered all my bases, so to say.
Thank you, Martijn. You know, with regard to Talk first about Aramco. We, our maximum sustained capacity is intact, and we can bring it on if called upon by the government, depending on the quota, in less than three weeks. We have been able to ensure that our maximum sustained capacity is intact and readily available. However, you know, repositioning these tankers right now, as I mentioned, there's 240 waiting outside for products, commodities, and some for oil. There is almost 600 inside. Relocating these tankers and moving the right number of tankers inside when everything goes back to normal is gonna take time. Filling these tankers, ensuring the logistics are done. Don't forget, we are different than others. We kept our production on.
Majority of our production is on stream because of the East-West Pipeline. Others, they had to shut down plants completely. When you shut down the plant completely, you run the risk of putting it back on. Certain times, when you look at facilities, especially pipeline, after two months, you need to mothball certain assets. De-mothball if you don't put it on. Putting these facilities back on and, you know, with that, you will definitely end up with some technical problems. To ensure that you reach that capacity is gonna take some time. You're talking about If we open today, certain countries might need three to six months, they announced that, to put their facility back at capacity.
We get into a longer period of time, it's going to take more because this facility would have been shut down for a much longer time than planned. With that, they would need, as I said, They need to look at more borrowing. The biggest issue is the tanker fleet. I said, that tanker fleet is messed up. The oil tankers, I would say, in the wrong places. They need to reassemble, move from certain parts of the world if assuming Strait of Hormuz opens shortly, and you need to bring them back. Not to mention, when I talk about take a long time. Global inventories were low. Inventories were at the bottom end of the five-year average before the crisis.
Right now, with a lot of the drawdown, these, I would say a lot of these, they need to restock. Not only governments, but as well as industries. Because in every refinery, every assets around the world, you have certain inventory. Most likely, they tap into these inventories. Now they need to re-restock on these inventories. It's gonna take time to meet the requirement and fill in the inventories that we started this crisis with a very low inventories globally. Now we are running the risk with every week, as I said, 100 million barrels that goes down. You know, you heard about 400 million barrels that came out, released from Europe and the U.S. Maximum you can pull out from there is 2 million barrels a day. Not like you can supply this much.
Later on, with 100 million barrels every week, we are already short of, as I mentioned, 880 million, 900 million barrels an hour. Every week from May 1st, another 100 million barrels, and until this crisis is over. These inventories will be depleted in the next. Companies, they need to tap into their spare capacity, which mainly exists here within the region. Unfortunately, you know, spare capacity doesn't exist somewhere else. All the spare capacity, this interruption also interrupted the spare capacity that existed within the region. That will take some time before we start. That's why the delay, lining up the tankers, making sure they go to the right terminals. You start filling in these tankers, and they start their journey.
You know, when we started the whole crisis in March, the impact was not much because a lot of the tankers that required were heading. They were on their way to the markets. We start seeing the problem much bigger in April, you will start seeing it much more in May and June because you are tapping into all these commercial inventories and SPRs more and more with time.
The second question of Martijn was, are there any issues for Aramco which over time might become more apparent [inaudible]?
I think we are capitalizing on our flexibility. The East-West Pipeline, we are looking at additional contingency that will give us more flexibility within our system. So far, you know, we are making sure that the reliability of our system and ensuring that we have enough spare equipment readily available and the contingencies, ensuring also that we continue to plan for the future, counting on, you know, might take longer than expected.
Thanks, Martijn.
Thank you.
Next question is from Kim Fustier at HSBC. Kim?
Hi. Good afternoon. Thanks for taking my questions. I wanted to ask about a couple of upstream fields that I believe were impacted by attacks in April. It was Manifa and Khurais. Manifa was restored within days. Could you confirm the status on Khurais? How much of the 300,000 barrels a day capacity has been restored, what's the timeline on that? I also wanted to ask you about the small dip in your refining supply reliability in the Q1. Is this to do with physical disruptions to your refineries? I'm thinking about Ras Tanura, SAMREF. Just with lower refinery utilization because you've prioritized crude exports. What should we expect in terms of refining supply reliability in the Q2, given that SATORP is only partly operational? Thank you.
Thank you, Kim. With regard to our oil assets, as I said, our MSC is readily available. Yes, based on the ministry report, Manifa and Khurais were attacked, but they are back on operation. We can meet our maximum sustained capacity of 200,000 barrels. We are no impact on our oil capacity as a result of these attacks. We were able to restore these facilities in few days. With regard to refining. Refining, you know, some of our refinery were attacked, as also highlighted by the ministry report. We are restoring. Some were restored, some were partially restored, and they are in the process of fully restoring these facilities. Of course, utilization is impacted if your refinery asset is in the Gulf region because of difficulty.
If you meet the Kingdom requirement, you cannot export some of them are designed for export markets. If you are located within the Gulf region, you might have difficulty. Utilization will be slightly impacted. We are maxing up our western region refinery assets, ensuring that we meet our requirement. For example, if you look at all of our assets. SAMREF is fully operational. YASREF is fully operational. SATORP, our joint venture in Jubail with TotalEnergies, it's partially on stream, and we are working to fully bringing it back. It is on stream, but not at full capacity right now. Ras Tanura refinery, which was also attacked, was brought back with some units right now going into T&I, but not. As soon as we finish the T&I, it should be readily available.
Thank you, Kim. The next question is from Henri Patricot at UBS. Henri?
Yes. Thank you. Two questions from my side. The first one, coming back to a comment you made, Amin, earlier, that you're looking at a more contingency. I was wondering just, to be few months into this disruption, whether you've identified ways to perhaps dip up the next further your pipeline capacity, your export capacity, in a relatively short period of time without meaningful investment, whether there's something like this that might be possible in the near term. Secondly, again, following up on the downstream. You mentioned exceptional quarter, $5 billion of EBIT, refining margins look very strong in the Q2. Just wondering to what extent that exceptional performance is replicable in the Q2 and even stronger than the Q1. Thank you.
Thank you, Henri. With regard to your first question, we are taking certain measures to increase our flexibility and reliability beyond what we have right now. I'm not gonna mention the details of what we're doing right now. As I said earlier, we are a learning organization. T his attack took place. There was a lot of learning about what needs also additional things that needs done to improve further. We are taking these measures to strengthen our resilience. We have proven through Abqaiq and Khurais and now through these attacks that we have a good system, and we always have contingency and flexibility within our system. Case in point is the East-West Pipeline, with all the pump station and maintenance that brought into full capacity within a short time period, eight days.
We are looking at extra measures to strengthen our resilience. At the details, we'll share it at another time. Ziad, about the refining, anything to add?
Hello, Henri. On the second question, Q1 saw an increase in refining and downstream margins, both refining, which increased by 14%. Chemicals increased by 7%. Our facilities were mostly operational. We're able to capture this margin. We expect because of the tightness that Amin talked about earlier in the markets, that tightness is basically in refined products as well. We expect margins to continue to be elevated, and we expect to continue to generate very good downstream results in Q2 as well.
Yep. Thank you.
Thanks, Henri. Next question, Lydia Rainforth at Barclays. Go ahead, Lydia.
Thank you, and good afternoon, gentlemen. Firstly, thank you for keeping everything going in the way that you have in terms of supplying the markets. I have two questions, if I could. The first one, can we just touch on pricing? Obviously, the OSPs have risen as we've gone in through May and June. You've talked about refineries obviously sort of having quite good margins. At what point do you expect the balance to shift back from if it is the crude that gets the benefit of the pricing versus necessarily the refined product side? Secondly, just to switch tack completely, you talked about some of the long-term planning side. Can you in terms of the AI side, I know that's an area you've done a lot of work on. I mean, can you just talk us through any progress that you've made since our last time together? Thank you.
I didn't get the second question, but on the first question, Because the refining margins were high, as Amin mentioned, we're seeing the most of the pricing power is actually in the product. That is why we are prioritizing our refineries and exporting products over, you know Then whatever's remaining goes to crude. As long as that continues, this will be our strategy. Of course, our strategy is flexible enough to switch very quickly to, you know, prioritizing crude exports. I didn't get the second question.
It's about AI, I think. Okay. Lydia, your second question about AI?
It was, yes. Just the progress that you're making there 'cause obviously, as I say, it's easy to focus on short-term stuff, but the long-term stuff obviously clearly does make a difference as well.
Yeah. You know, we have through AI, we have successfully captured almost $11 billion of true realized value since 2023. In the year, almost $ 5.3 billion in 2025. This is the total realized value. Our AI solutions is helping us a lot in monitoring, for example. It's not only in what we realize as a value, but in the current circumstances, a lot of our surveillance, what exactly happening in the different plants, pipeline networks, operation is captured through AI. You know, 1 billion data points every day. It helps us a lot to understand. It gives us a lot of flexibility in our operational, the way we operate and the way we respond to different events that is currently happening.
We are able also through capturing, using AI to do an assessment because we needed to do a lot of assessment following these attacks in drones and using our cameras and our sensors that are existing in different plants and through our system. All of this data helped us a lot to respond effectively. We have seen the results, you know, where most of the facility we have either brought back on stream quickly as possible, or they are in the process to be brought in on stream, by now. AI is a major enabler. It's given us a lot of solutions to deliver on our commitments and meet our performance KPIs.
With regard to what Ziad mentioned about crude or products, you know, we are maximizing product at this stage because of the higher margins. Depends on the situation, how long it will take. That might be the case till the Strait of Hormuz is open, then it will all depends on what happen after this. We think we will be seeing a huge significant demand when the Straits opens up as a result of not only demand growth, as a result of filling the inventories, the commercials and the government's SPRs.
Hey, thanks, Lydia. We've still got a few questions. We've still got six to go. The next question is from Matt Lofting at J.P. Morgan. Go ahead, Matt.
Thank you. Congratulations on the operational resilience the company continues to demonstrate. As Saudi Aramco's ramped up deployment of the East-West Pipeline very impressively, could you just talk about how stable the logistical processes on the kingdom's West Coast, including Yanbu, have proved? I just wonder whether you're seeing any limitations or potential pinch points emerging to any of those outlets in terms of being able to consistently export those volumes, as the Hormuz closure persists. Thank you.
Thank you, Matt. You know, the East-West Pipeline on pumping, pump station associated with it, terminals in the north or south, were fully operational before, at a reduced level, of course, before the events that took place. We had to ramp up, as I said, in eight days to go to capacity. With that, the only issue that we have seen is the lining up vessels. You know, as I said, most of the vessels were in the wrong place. They were either entering Hormuz or waiting to load from our eastern terminal. The reason is most of our crude export goes to Asia. That's why mainly what we use from the western region is what goes through to Europe or our domestic refineries in the western area.
To do a lot of relocation of all of these vessels, to relocate to our north and south terminals in Yanbu took a lot of efforts because, you know, customers, in the beginning, in the first few days, they thought things will be opening up. They'd rather wait at the entrance to Hormuz because they thought the situation will ease up in a day or two. There was an extra cost for them to go through Yanbu, longer distance. They just wanted to wait a little bit. Reality, you know, hits when they found out this is gonna be take longer than expected. As a result, we were able to line up all the tankers to load from our facility in the north and south of Yanbu. Took a lot of efforts and arrangement and marketing to work with the customers to ensure they can meet their commitment.
Thanks, Matt. Moving on to the next question, which is from Shashank at Bank of America.
Yes. Thank you, Peter, and congratulations on a strong set of results. I just have one question with regards to your storage, both in Saudi and outside. Just wondering how the trend of, you know, your storage has been in the month of April, and especially in Saudi, given I'm assuming you've been able to produce again a bit more with some of the assets that you mentioned which were impacted back and operating. Again, in line with that, how does inventory or storage look outside of Saudi in some of your locations? Thank you.
Thank you, Shashank. You know, we don't disclose storage volumes to any or externally for commercial reasons. We have significant, I would say, storage domestically, including extensive network across our asset tank farms and also underground storage. Internationally, we have been able to tap into our global storage hubs, enhance delivery to our customers from locations in Asia and Europe and Rotterdam, the Middle East. Our assets that inventories our storage facilities in Japan and Korea were very handy during the current events, and we were able to tap into these assets. They provide us with additional flexibility and provided, of course, especially the international one, that this disruption is not further extended.
Okay, Shashank. Next question is from Eva Xenios at BNP Paribas.
Hi. Thanks for taking my questions, and again, congratulations on the results. Firstly, I was wondering if you had any more comments about demand destruction, specifically for petrochemicals in Asia, or if it's just short-term demand rationing in your view. You talk about once the Strait of Hormuz reopens, it will take a few months for the oil market to rebalance. Are you able to comment if this estimate includes not just logistics, but time taken to clear any mines laid within the strait? Because one of the two ships are already reporting again through the strait, you're assuming that, you know, that will really be fine.
Sorry, Eva. I'm afraid we missed that second question. Could you repeat the second question?
Yeah, of course. Second question was, you talk about once the Strait of Hormuz opens, it will take a few months for the oil market to rebalance. Are you able to comment if this estimate isn't just logistics, but also time taken to clear mines within the strait and other security insurances?
Yeah. Thank you, Eva. No, I'm just talking about logistics. It would take months.
Okay.
Mines is aside. You need to add to it whatever time to clear these mines. I'm assuming they will do it simultaneously. They will start cleaning the mines before any tankers can access. Logistically, you know, you need to put your assets back on. You start shut down plants for certain countries in the region where they had to shut down some of their plants. They need to put them on. There's a lot of work. You need to add how much time it will take to clear the mines to it, to whatever times we talked about. With regard to, I wouldn't call it destruction. I would call it demand rationing.
We don't see any demand destruction or curtailment of consumption. In fact, what we are seeing is unmet demand as a result of the supply physically not reaching, with supply loss estimated to be between, as I said, almost 1 billion barrels. As you said, you know, in response to the supply disruption by the Strait of Hormuz, some petrochemical companies reduced utilization in certain Asian markets. We noticed that. End users are drawing from inventories. As long as shipping and trade remain disrupted, knock-on effect will continue to be felt across the petrochemical product markets. Several of Asian petrochemical companies have tapped into their inventories, reduced production, while a number of them have declared force majeure due to supply constraints.
There have been arbitrage volume from the west to the east, that might not be sufficient to meet all of the demand from Asia. The Asian, I would say, petrochemical sector plays a major role in various critical industries, especially automotive, agriculture, packaging, and construction, just to name a few. It depends how long these prices will limit our petrochemical industry, especially in the region, which is significant to supply the market.
Thank you, Eva. We have two questions to go. The first of those is from Sultan Al-Zawayen at Al Rajhi Bank. Go ahead, Sultan.
Hello. Hello, everyone. First of all, congrats on the strong and resilient results. My first question is on April production level. Can you shed some light about the production level? Was it higher than March, or not? The effective capacity of Yanbu terminal during the month of April? Thank you so much.
Thank you, Sultan. We don't really report on a month by month. We report on a quarter by quarter. You can see, overall liquid production had increased to 11.1 million barrels in the Q4, and was reduced by around half a million barrels in this Q1 this year. With regard to Yanbu terminals, the terminals have around 5 million potential for exports. We have the, you know, Yanbu North and Yanbu South, and we are in the process of increasing that. We're looking at ways to increase that beyond the 5 million barrels of export capacity within these terminals.
Thank you, Sultan. Good questions. Last question for this afternoon direct today is from Bertrand Hodée at Kepler Cheuvreux. Go ahead, Bertrand.
Yes. Good afternoon, and congratulations on the strong results and the resilience of Aramco operation. You explained that now refineries in the east are supplying the domestic markets. Can you give a bit more details on the product side, volumes and type of product you are able to export via the Red Sea currently?
Bertrand, a s I said, you know, in the east, we are capitalizing on our refineries to meet local demand. In areas where it's not required, for example, a refinery not really using a product that we cannot export because of the closure of the Strait of Hormuz, we reduce utilization of that refinery because we don't have access to export these products in the eastern part of the kingdom. The western side of the kingdom, we are maximizing, as I mentioned, our realization of these assets. And we have a significant amount of products. You can say we are a net exporter of refined products from the western region. Almost 900,000 of refined products are exported to western region.
We are capitalizing and maxing our, the capacity of our western side refinery and putting that into export market. Not using, of course, each refinery has its own export, terminal, by the way. When we talk about 5 million barrels, and we're looking at increasing that beyond the 5 million barrels right now, that's for crude. For product, we do have existing export terminals for products. We are not really crowding our crude export capacity.
Thank you very much. Many thanks for this very detailed and clear answer. Thank you.
Thank you, Bertrand Hodée. I think that brings us to the end of the Q&A session of the call. Thank you very much for everybody who joined us. Thank you again to Amin and Ziad in the busy schedule for answering everybody's questions. If there's any further questions that people have, that's what investor relations are for. Never hesitate. Please give us a ring. The next scheduled event is, of course, our Q2 results, which will be published on the 4th August. We look forward to speaking to you at then, also many times in the intervening period. Thank you very much indeed.