Higher oil prices help Saudi Aramco earn $88B in first half

DUBAI, United Arab Emirates (AP) — Saudi energy giant Aramco on Sunday said its profit rose 90% in the second quarter compared with the same period last year, helping its half-year revenue reach nearly $88 billion. As people around the world pay higher gas prices, the increase is a boon for the kingdom and the crown prince’s spending power. Energy companies earn more at the pump.

Major oil companies had a strong quarter ExxonMobil posted an unprecedented profit of $17.85 billion, while Chevron posted a record $11.62 billion. UK’s Shell breaks its own profit record.

Aramco’s net profit hit $48.4 billion in second-quarter earnings that ended in June — higher than in the first six months of 2021. Profits reached just $47 billion. This set a new quarterly earnings record for Aramco, since it first floated 5% of the company on the Saudi stock market in late 2019.

What will Aramco’s full-year profit be in 2020, given its earnings last quarter?, when oil demand fell during pandemic lockdowns. Its half-year revenue of $87.9 billion outpaced Aramco’s full-year revenue in 2019, when profits reached $88 billion before the pandemic.

The company jumped to higher crude oil prices and sales volumes and higher refining margins. Saudi Arabia’s vast oil reserves are among the cheapest in the world to produce.

Aramco’s finances are critical to the kingdom’s stability; While its margins are high, Saudi Arabia’s economic growth reflects that. As countries around the world grapple with inflation and recession, The International Monetary Fund predicts that the Saudi economy will grow by more than 7.6% this year.

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Despite years of efforts by Crown Prince Mohammed bin Salman to diversify the economy and some success in boosting non-oil revenues, Saudi Arabia continues to rely heavily on crude exports for public sector salaries, generous benefits for citizens and defense spending. Aramco’s proceeds help meet the Prince’s Vision 2030 infrastructure goals.

As promised since its IPO, the company will pay $18.8 billion in dividends to shareholders in the second quarter. Aramco’s major shareholder, the Saudi government, has reaped huge profits.

Aramco is seen as the key to Saudi’s economic transformation. Its proceeds are from the IPO The country’s sovereign wealth fund was transferred to invest in projects to promote new sectors and create new jobs for Saudi youth.

Brent crude is trading around $100 a barrel as OPEC, led by Saudi Arabia, and non-OPEC, led by Russia, steadily increase output. was cut during the peak of the epidemic. As a result, crude oil prices rose sharply Russia invaded Ukraine In February. Prices have fallen below the $100 mark Economic growth in China and the US has slowed in recent weeks

Despite current downward economic pressures, Aramco Chairman CEO Amin Nasser said he expects oil demand to continue to grow for the rest of the decade. OPEC said it expects global oil demand to increase by 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 oil demand, as do countries around the world, including Saudi Arabia.Pledge to reduce their carbon emissions to avoid catastrophic global warming.

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“The world is calling for affordable, reliable energy, and we are answering that call,” he said, emphasizing greater investments 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, most of which is exported to Asia and its biggest customer, China. The crown prince said the kingdom’s maximum production capacity is 13 million barrels per day. Aramco says it is working to reach that ceiling one day.

Aramco produces all of Saudi Arabia’s oil and gas with its production limits dictated by the Ministry of Energy.

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