In a recent announcement, the Saudi Arabian energy conglomerate Aramco declared a significant profit of $121 billion for the previous year. Although this figure falls short of the $161 billion record profit reported in 2022, it stands as the second-highest in the company’s history. The decline is attributed to the combination of reduced energy prices and decreased sales volume, alongside diminished refining and chemical margins, as documented in the company’s financial disclosure to the Tadawul stock exchange.
The Organization of the Petroleum Exporting Countries (OPEC+), which includes Saudi Arabia, has been strategically reducing oil production to influence global energy prices positively. This tactic, however, also tightens the financial situation for Saudi Arabia as it ventures into ambitious developmental initiatives steered by the kingdom’s Crown Prince, aiming to diminish reliance on oil revenue.
Despite experiencing a downturn, Aramco did not hold back on rewarding its shareholders, increasing the dividends to an impressive $31 billion for the last quarter. The company has scheduled a conference call to further discuss these financial outcomes.
Aramco’s total revenue took a hit, dropping to $440 billion from the previous year’s $535 billion. Yet, the company’s CEO, Amin H. Nasser, emphasized the firm’s resilient performance amidst challenging economic conditions, which ensured robust cash flows and profits.
The state-owned enterprise reported an average production of 12.8 million barrels of oil per day, with directives from the Saudi government to maintain this output level, despite earlier ambitions to expand production.
Joining forces with Russia and other non-OPEC members, Saudi Arabia seeks to manage oil production levels to sustain higher global oil prices. At the time of reporting, Brent crude oil was trading at just below $82 per barrel.
With a market valuation of $2 trillion, Aramco ranks as the fourth most valuable company globally, trailing behind technology giants Apple, Microsoft, and NVIDIA. Aramco shares experienced a slight increase, trading at $8.64 on the Tadawul.
The cost-efficient production of crude oil in Saudi Arabia, due to its easily accessible reserves, is pivotal to the country’s economy. The Crown Prince envisions utilizing this wealth to transition the nation away from its dependence on oil, exemplified by the ambitious $500 billion Neom city project among other ventures.
However, the company’s substantial profits have drawn criticism from environmental activists, who argue that the continued reliance on fossil fuels exacerbates the global climate crisis.
In a strategic move, Prince Mohammed recently transferred an additional 8% stake in Aramco to the nation’s sovereign wealth fund, a transaction valued at over $160 billion. Despite this, the royal family retains the majority control of the company, with only a fraction available for public trading.