Profits at Saudi Aramco Fall Short of Previous Year’s Peak
Amid changing conditions in the global energy markets, Saudi Arabia’s Aramco reported earning a substantial $121 billion in profit for the last year. This figure, while impressive, represents a decline from the record-breaking $161 billion in profits enjoyed in 2022, attributed to soaring energy prices at the time.
The earnings still stand as the company’s second-highest result to date. OPEC+ nations, including Saudi Arabia, have been actively reducing their oil output in an effort to prop up global energy prices. This strategy, however, poses a challenge for Saudi Arabia as the nation pursues ambitious developmental initiatives aimed at reducing its dependence on oil income.
“The decrease mainly reflects the impact of lower crude oil prices and lower volumes sold, and weakening refining and chemicals margins,” explained Aramco in a regulatory filing.
In spite of the earnings downturn, Aramco announced an increase in its shareholder dividends, committing over $31 billion for the fourth quarter.
Aramco’s total revenue for the past year was reported at $440 billion, a decrease from the previous year’s $535 billion. Amin H. Nasser, the CEO of Aramco, credited the company’s resilience and agility
for its robust cash flows and profitability in the face of economic challenges.
Producing about 12.8 million barrels of oil daily, Aramco has adhered to the Saudi government’s mandates to maintain production levels despite earlier plans for an increase.
The company’s strategic alignment with OPEC and partnership with Russia aims to control production and bolster oil prices globally. The price of Brent crude was noted to be under $82 a barrel at the time of reporting.
With a market valuation of $2 trillion, Aramco is ranked as the fourth most valuable company worldwide. Its shares experienced a slight increase in value on the Tadawul, trading at $8.64.
The kingdom’s relatively inexpensive crude production costs have enabled Crown Prince Mohammed bin Salman to envision a future less reliant on oil revenue, exemplified by projects like the proposed $500 billion Neom city.
Environmental advocates, however, have expressed concerns over the profitability of fossil fuels amidst the urgent climate change crisis.
In a significant financial move, Prince Mohammed recently shifted an additional 8% of Aramco’s shares, valued at over $160 billion, to the nation’s sovereign wealth fund. The majority of Aramco remains under the ownership of the Al Saud royal family, with only a fraction available for public trading on the Tadawul stock market.