Numbers in Focus: Saudi Aramco’s Q2 Profit Report Indicates a Sharp Decline
Saudi Aramco Reports 38% Profit Drop in Q2 Due to Lower Oil Prices
Saudi Arabia’s oil giant, Saudi Aramco, announced a significant 38% decrease in its second-quarter profit compared to the same period last year, when prices surged following Russia’s invasion of Ukraine. The company attributed the decline to lower crude oil prices and weakened refining and chemicals margins. This comes after a first-quarter net profit drop of 19.25%.
In a statement released on the Saudi stock exchange, Aramco’s CEO Amin Nasser highlighted the company’s resilience and adaptability in navigating market cycles. He affirmed that the company’s mid to long-term outlook remains unchanged and noted the necessity of continued investments in energy projects to ensure energy security.
Riyadh, the world’s leading crude oil exporter, reduced production by 500,000 barrels per day in April as part of a coordinated move with other oil-producing nations to cut supply by over one million barrels per day to stabilize prices. In June, the Saudi energy ministry implemented an additional voluntary cut of one million barrels per day, which has been extended through September.
Aramco’s role as the primary revenue source for Crown Prince Mohammed bin Salman’s Vision 2030 economic diversification initiative underscores its importance to the kingdom’s economic transformation. Despite the recent profit decline, the oil price threshold needed to balance Saudi Arabia’s budget is around $80 per barrel, and current prices are above that level.
The company’s investments aim to increase national production capacity to 13 million barrels per day by 2027. While the ongoing production cuts are financially challenging for Aramco, they reflect Saudi Arabia’s commitment to defending oil prices as part of the OPEC+ coalition’s strategy.
Nasser emphasized that global demand is expected to grow in the third quarter of 2023 compared to the same period last year, largely driven by stronger-than-expected demand in China.
Saudi Arabia holds a 90% stake in Aramco, and the company reported that its base dividend for the second quarter will remain at $19.5 billion, with an additional performance-linked dividend of $9.9 billion in the third quarter. Similar dividend payments are projected for the next six quarters.
