Aramco Has Credit Scope to Manage Hormuz Risks: BI Video

Aramco has about 3 million barrels a day of oil exports at risk from closure of the Strait of Hormuz-- more than Exxon Mobil's global oil production-- which could reduce annual cash-flow by $32 billion. However, the impact of higher oil prices on the remaining 7 million barrels a day of production could limit the net cash-flow impact to $11 billion-- still significant, but only 8% of the $136 billion of cash-flow generated by one of the world's most profitable companies in 2025. With limited surplus cash-flow after paying the $85 billion dividend burden, this cash-flow reduction could hit net debt-- but with leverage of 3.8% against an upper comfort level of about 15%, Aramco has at least $63 billion of balance sheet headroom. Paul Vickars discusses the implications for credit quality and spreads in this short video.