2nd consecutive decrease, after Q1 2023
Analysts say the Kingdom needs oil prices around $80 a barrel to balance its budget.
Oil giant Saudi Aramco reported a 38% plunge in second-quarter profits on Monday, with profits falling to $30.08 billion, a significant drop from the same period last year, when oil prices had risen after Russia's invasion of Ukraine.
The 38% year-over-year decline “primarily reflects the impact of lower crude oil prices and weakening refining and chemicals margins,” its state-owned company said. of Saudi Arabia in a statement published on the country's stock exchange. Saudi Arabia owns 90% of Aramco's shares.
The second-quarter earnings decline follows a 19.25% decline in the first quarter.
“Our strong results reflect our resilience and ability to adapt through market cycles,” said CEO Amin Nasser.
“We continue to demonstrate our longstanding ability to meet the needs of customers around the world with high levels of reliability. For our shareholders, we plan to begin distributing our first performance-based dividend in the third quarter,” he added.
Production from the world's biggest crude exporter has fallen since Riyadh last April announced cuts of 500,000 barrels per day, part of a coordinated move with other oil powers to reduce supply by more than a million barrels daily in an attempt to support prices.
In June, Saudi Arabia's Ministry of Energy announced a further voluntary cut of one million barrels per day, which took effect in July and was extended until September.
The Kingdom's daily output is now about 9 million barrels , well below its daily capacity of 12 million barrels.
Saudi Arabia is counting on high oil prices to fund a sweeping reform agenda, known as “Vision 2030,” which aims to turn its economy away from fossil fuels.
Analysts say the Kingdom needs oil prices to hover around $80 a barrel to balance its budget.
Prices are now above that threshold, a sign that the recent supply cuts are starting to have the desired effect.
The cuts “show how far the Kingdom will go to defend oil prices, as falling prices for this essential commodity are detrimental to its ambitious efforts to diversify its economy,” said Herman Wang, deputy director of oil division at S&P Global Commodity Insights.
Aramco makes investments to increase national production capacity to 13 million barrels per day by 2027.
Aramco announces earnings a record total of $161.1 billion last year, allowing the Kingdom to record its first annual budget surplus in nearly a decade.
In December 2019, the company disposed of a 1.7% stake of the Saudi Stock Exchange, bringing in $29.4 billion in revenue.
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