Oil majors had a strong quarter with Exxon Mobil posting a record profit of $17.85 billion, while Chevron posted a record $11.62 billion. Britain’s Shell broke its own profit record. Aramco’s net profit was helped by profits in the second quarter ended in June that reached $48.4 billion – a figure higher than all of the first six months of 2021, when profits reached just $47 billion. It marks a new quarterly profit record for Aramco after it first floated about 5% of the company on the Saudi stock exchange in late 2019. Its earnings in just this latest quarter are nearly what Aramco’s full-year earnings were in 2020, when demand for oil collapsed during pandemic restrictions. Its half-year profit of $87.9 billion put Aramco on track to far surpass its full-year profit in 2019, before the pandemic, when profits reached $88 billion. The company credited the jump to higher crude oil prices and sales volumes, as well as higher refining margins. Saudi Arabia’s vast oil reserves are among the cheapest to produce in the world. Aramco’s finances are vital to the kingdom’s stability. when margins are high, Saudi Arabia’s economic growth reflects this. As countries around the world grapple with inflation and recession, the International Monetary Fund predicts that Saudi Arabia’s economy will grow more than 7.6 percent 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 raising non-oil revenues, Saudi Arabia continues to rely heavily on crude exports that pay for public sector wages, generous citizen benefits and defense expenses. Aramco’s profits also help the prince realize his Vision 2030 infrastructure goals. The company will pay an $18.8 billion second-quarter dividend to shareholders, as it has promised since its IPO. Higher earnings bode well for the Saudi government, which is Aramco’s largest shareholder. Aramco is seen as key to reshaping the Saudi economy. Its IPO proceeds were transferred to the country’s sovereign wealth fund to invest in projects to stimulate new sectors and create new jobs for Saudi Arabia’s youth. Brent crude is trading around $100 a barrel, even as OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have been steadily increasing production levels that had fallen during the height of the pandemic. The price of oil rose sharply after Russia invaded Ukraine in February. Prices have fallen below the $100 mark in recent weeks amid slowing economic growth in China and the US Aramco Chairman and CEO Amin Nasser said he expects oil demand to continue growing for the rest of the decade, despite current downward economic pressures. OPEC has said it expects global oil demand to rise by about 3 million barrels per day this year with total 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 Arabia, pledge to cut carbon emissions to prevent catastrophic levels of global warming. “The world is asking for affordable, reliable energy, and we’re answering that call,” 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 business. 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 biggest customer, China. The crown prince has said the kingdom’s maximum production capacity is 13 million barrels per day. Aramco says it is working to one day reach that cap. Aramco produces all of Saudi Arabia’s oil and natural gas within production limits dictated by the energy ministry.
Follow Aya Batrawy on twitter at
