Aramco is preparing another financial buffer as the regional conflict disrupts oil shipments and raises uncertainty over export volumes.
The Saudi oil giant is nearing a SR37.5 billion ($10 billion) revolving credit agreement with international banks, Bloomberg reported. The facility could be signed in the coming weeks, with borrowing priced at 0.6 percentage points above the Secured Overnight Financing Rate, a benchmark for dollar loans.
The lenders include Bank of China, Citigroup, HSBC, Industrial and Commercial Bank of China, JPMorgan and Mitsubishi UFJ Financial Group.
A loan Aramco doesn't have to use: A revolving facility allows a company to borrow, repay and borrow again within an agreed limit. Securing it doesn't mean Aramco will immediately draw the full amount. It gives the company access to additional cash when needed.
Why now? Gulf crude exports have declined for four consecutive weeks, with shipments through the Strait of Hormuz running at around 60% of normal levels, according to ANZ Research.
Aramco has substantial financial resources, but a standby credit line offers flexibility while it continues funding major projects and shareholder distributions. The facility is not, by itself, evidence of a cash shortage.
What's next? Aramco reports Q3 results on November 3. Investors will be watching how much crude it actually sold, how export disruptions affected cash flow and whether its dividend commitments remain unchanged.
