Aramco, officially known as the Saudi Arabian Oil Co. , announced its total revenue for the half-year was $220.7billion, a slight increase from $218.6billion the previous year
Saudi oil giant Aramco has reported half-year profits of $56.3billion on Tuesday, a decrease from the previous year due to dwindling volumes sold amid concerns about the global economy.
Aramco, officially known as the Saudi Arabian Oil Co. , announced its total revenue for the half-year was $220.7billion, a slight increase from $218.6billion the previous year. Profits in 2023 were $61.9billion, nearly $5billion more.
“The decrease was primarily a result of lower crude oil volumes sold, weakening refining margins and lower finance and other income,” Aramco revealed in a filing on Riyadh’s Tadawul stock exchange. “This was partially offset by higher crude oil prices and lower production royalties compared to the same period last year and lower income taxes and zakat,” or Islamic charitable contributions.
Aramco will distribute dividends of $20.3billion for the second quarter and a performance-linked dividend of $10.8billion, the company confirmed. It anticipates its overall dividend for the year will exceed $124billion. While a small portion of Aramco is traded on the Tadawul, the vast majority of the firm is owned by the Saudi Arabian government, fuelling its expenditure and enriching its Al Saud Royal family.
Saudi Arabia, a key player in the OPEC cartel, has joined forces with Russia and other non-members to limit production and bolster global oil prices. Benchmark Brent crude was trading at around $77 a barrel on Tuesday following a dramatic 12.4% drop in Japan’s Nikkei stock market on Monday – its worst single-day decline since 1987.
This marked the continuation of a global sell-off that kicked off last week. A report released on Friday revealed that US employers significantly reduced their hiring in July, far more than economists had predicted. This latest piece of data on the US economy has fuelled fears that the Federal Reserve may have overstepped by keeping interest rates high for too long in an attempt to curb inflation.
However, the Nikkei made a recovery on Tuesday morning, almost making up for the previous day’s losses. Crude oil prices took a hit during the pandemic but saw a resurgence in 2022 due to Russia’s war on Ukraine, reaching nearly $140 at one point. This caused friction between the Biden administration and Saudi Arabia, but prices have since fallen to a six-month low amid concerns about the broader global economy.
As a result, petrol prices have become less of a concern ahead of the November election between former US President Donald Trump and Vice President Kamala Harris. Aramco, with a market value of $1.7trillion, ranks as the world’s fifth-most valuable company, trailing behind tech giants Apple, Microsoft, NVIDIA and Alphabet, Google’s parent company. However, Aramco’s stock has taken a nearly 20% hit over the past year due to falling oil prices.
In 2023, Aramco reported a profit of $121billion, a decrease from its 2022 record, attributed to lower energy prices. Saudi Arabia’s vast oil reserves, conveniently located near the desert surface, make it one of the cheapest places globally to produce crude oil.
Crown Prince Mohammed bin Salman plans to utilise this oil wealth to shift the kingdom away from oil sales, with ambitious projects like his proposed $500billion futuristic desert city, Neom. However, with oil prices on the decline, Saudi Arabia is reportedly considering scaling back some of these ambitions as it potentially faces impending budget deficits. Meanwhile, activists have slammed the profits amid global worries about the burning of fossil fuels exacerbating climate change.
