Saudi Basic Industries Corp. (Sabic), one of the world’s leading petrochemical producers, reported a rise in net profit for the third quarter despite challenges related to regional shipping disruptions. The company’s net income increased to 499 million Saudi riyals ($133 million), up from 434 million riyals in the same period last year. However, total revenue declined slightly to 28.17 billion riyals from 29.08 billion riyals.

Sabic attributed the profit increase primarily to higher average selling prices and improved results from its associates and joint ventures. A key factor was the reversal of an impairment on its investment in Swiss chemicals firm Clariant, which contributed significantly to earnings. These positive impacts were partially offset by a 916-million-riyal rise in selling and distribution expenses, driven by ongoing supply chain disruptions.

The company’s third-quarter performance occurred amid heightened tensions in the Gulf region stemming from the U.S.-Iran conflict. This situation has disrupted chemical exports passing through the Strait of Hormuz, a vital shipping route, compelling Gulf producers like Sabic to explore alternative transportation pathways.

S&P Global Ratings has flagged the difficulties faced by petrochemical and fertilizer producers in the Gulf due to declining export volumes and increased logistics costs resulting from these disruptions. The ratings agency noted that although rising product prices have helped, they are unlikely to entirely compensate for the challenges in shipping and distribution. The firm also highlighted the relative ease of storing and rerouting solid chemical products compared to liquid ones, which may influence how effectively producers in Saudi Arabia and the United Arab Emirates can manage export redirection.

Sabic’s recent financial results will offer insights into the company’s ability to navigate these regional export constraints while maintaining profitability under complex market conditions.