Saudi Arabian Oil Co (Saudi Aramco) yesterday reported a 24.7 percent decline in profits last year compared with the previous year, the result of lower oil prices and production cuts.
The oil giant in a filing said that with the Saudi stock market that net income reached 454.7 billion Saudi Arabian riyals (US$121.25 billion), compared with 604.01 billion riyals in 2022.
“The decrease mainly reflects the impact of lower crude oil prices and lower volumes sold, and weakening refining and chemicals margins,” Aramco said.
Photo: AFP
Russia’s invasion of Ukraine in February 2022 prompted oil prices to skyrocket, peaking at more than US$130 per barrel that year. Aramco reported what it described as record profits for 2022, giving the kingdom its first annual budget surplus in about a decade.
“In 2023 we achieved our second-highest ever net income. Our resilience and agility contributed to healthy cash flows and high levels of profitability, despite a backdrop of economic headwinds,” Aramco CEO Amin H. Nasser said in a statement.
“We also delivered for our shareholders with a 30 percent year-on-year increase in total dividends paid in 2023,” he added.
Last year, prices dropped to US$85 per barrel, resulting in year-on-year profit drops of 23 percent in the third quarter, 38 percent in the second quarter and 19.25 percent in the first quarter of last year for Aramco.
Analysts said the kingdom needs oil to be priced at about US$80 per barrel to balance its budget, although that could be thrown off by production cuts and ramped-up spending.
The world’s biggest crude oil exporter said on March 3 that it was extending its oil supply cuts of 1 million barrels per day through June.
Riyadh first announced its voluntary cut after an OPEC+ meeting in June last year.
It followed a decision in April by several OPEC+ members to slash production voluntarily by more than 1 million barrels per day (bpd) — a surprise move that briefly buttressed prices but failed to bring about lasting recovery.
The kingdom’s daily production is now about 9 million bpd, far below its reported daily capacity of 12 million bpd.
Aramco is the main source of revenue for Saudi Arabian Crown Prince Mohammad bin Salman’s ambitious economic reform program known as Vision 2030.
On Thursday last week, the kingdom said it transferred an additional 8 percent Aramco stake to firms owned by the kingdom’s Public Investment Fund (PIF).
The transfer brought to 16 percent the cumulative amount of shares transferred to the PIF, one of the world’s largest sovereign wealth funds, and its subsidiaries.
The stake was worth about US$164 billion at the company’s current market capitalization, an Aramco media officer said.
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