DUBAI, United Arab Emirates (AP) – Saudi energy company Aramco said on Sunday its second-quarter profits jumped 90% compared to the same time last year, pushing half-year profits to nearly $88 billion. The increase is a boon to the kingdom and the crown prince’s purchasing power as people around the world pay higher gas prices at the pump, while energy companies reap top profits.
Major oil companies had a strong quarter Exxon Mobil posted an unprecedented profit of $17.85 billion, while Chevron made a record $11.62 billion. British Shell broke its own profit record.
Aramco’s net income was helped by its second-quarter profit ended June, which reached $48.4 billion — a higher figure than all of the first six months of 2021. when profits reached just $47 billion. It sets a new quarterly record for Aramco since it first brought about 5% of the company into the Saudi stock market in late 2019.
Profit for this past quarter alone is almost what Aramco’s full year profit was in 2020, as demand for oil collapsed during pandemic lockdowns. Its half-year earnings of $87.9 billion put Aramco on track to far surpass its 2019 full-year profit ahead of the pandemic, when profits reached $88 billion.
The company attributed the jump to higher crude oil prices and volumes sold, as well as higher refining margins. Saudi Arabia’s vast oil reserves are among the cheapest in the world to produce.
Aramco’s finances are crucial to the stability of the kingdom; when margins are high, Saudi Arabia’s economic growth reflects that. As countries around the world struggle with inflation and recession, the International Monetary Fund predicts that the Saudi economy will grow by more than 7.6% this year, the highest in the world.
Despite years of efforts by Crown Prince Mohammed bin Salman to diversify the economy and some success in increasing non-oil revenues, Saudi Arabia remains heavily dependent on crude oil exports that drive public sector salaries, generous benefits for pays citizens and defense spending. Aramco’s earnings will also help the Prince execute on his Vision 2030 infrastructure goals.
The company will pay a $18.8 billion dividend to shareholders for the second quarter, as it has promised to do since its IPO. The higher profits bode well for the Saudi government, which is Aramco’s main shareholder.
Aramco Is Seen As Key To Overhauling The Saudi Economy. The proceeds of the IPO were transferred to the country’s sovereign wealth fund to invest in projects to boost new sectors and create new jobs for Saudi youth.
Brent oil is trading at about $100 a barrel, even as OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have steadily increased production levels that was cut during the height of the pandemic. Oil price rose sharply after Russia invaded Ukraine in February. Prices have fallen below $100 in recent weeks amid slowing economic growth in China and the US
Aramco President CEO Amin Nasser said he expects oil demand to continue growing for the remainder of the decade, despite current downward economic pressures. OPEC has said it expects world oil demand to increase by about 3 million barrels per day this year, with aggregate oil demand averaging 100 million barrels per day.
Nasser said Aramco’s financial results so far this year reflect this increased demand for oil, even as countries around the world, including Saudi Arabiapledge to reduce their carbon emissions to prevent catastrophic global warming.
“The world is crying out for affordable, reliable energy and we are responding to that demand,” he said, urging greater investment in oil and gas.
“At a time when the world is concerned about energy security, you are investing in the future of our company. Our customers know that no matter what happens, Aramco will always deliver,” Nasser said in a short video released with the financial results.
Saudi Arabia currently produces about 10.5 million barrels per day, much of which is exported to Asia and its largest customer, China. The Crown Prince has said the kingdom’s maximum production capacity is 13 million barrels per day. Aramco says it’s working on reaching that ceiling someday.
Aramco produces all of Saudi Arabia’s oil and gas with production limits imposed by the Ministry of Energy.
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