(Bloomberg) -- The surge in oil prices has been good for Saudi Aramco's upstream business, but it's hurting the refining and chemicals unit.
Aramco's downstream arm -- which includes refineries, retail operations, trading and the energy giant's chemicals subsidiary, Sabic -- made a $4 billion profit before interest and tax in the third quarter. That was up from a loss of almost $800 million a year earlier, but down 13% from the previous three months.
That suggests margins for the business have peaked and are now getting squeezed as prices for feedstock such as oil and gas continue to climb.
Supply-chain disruptions and higher energy costs will probably weigh on margins over the rest of the year, Sabic said last week, when it also reported a quarter-on-quarter drop in income. In addition, the approaching northern hemisphere winter months usually see fuel demand slacken.
Aramco's upstream operations, mainly consisting of oil and gas production, continue to boom. Profit before interest and tax increased by 21% from the second quarter to $55 billion, the most since 2018.
The company's crude output is set to rise in final three months of the year -- to around 10 million barrels a day -- as Saudi Arabia and the OPEC+ cartel ease supply cuts begun in 2020. If oil prices hold on to their gains for this quarter, upstream profits could jump even more.
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