DUBAI, United Arab Emirates (AP) — Saudi energy company Aramco said on Sunday that its profits jumped 90% in the second quarter compared to the same period last year, helping its half-year profits to reach nearly 88 billion. dollars. The increase is a boon for the kingdom and the crown prince’s purchasing power like people around the world pay higher gas prices at the pumps while the energy companies reap the biggest profits.
Major oil companies had a good quarter with Exxon Mobil making a record $17.85 billion profit while Chevron made a record $11.62 billion. UK’s Shell smashed its own profit record.
Aramco’s net profit was helped by second quarter profits ending June which reached $48.4 billion – a higher figure that the whole of the first six months of 2021, while profits only reached $47 billion. It sets a new quarterly profit record for Aramco since it first floated around 5% of the company on the Saudi stock market in late 2019.
Its earnings for the last quarter are almost those of Aramco annual profits were in 2020, when oil demand crashed during the pandemic shutdowns. Its half-year earnings of $87.9 billion put Aramco on track to far exceed earnings in the full year 2019, before the pandemic, when earnings hit $88 billion.
The company attributed the jump to higher crude oil prices and volumes sold, 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 crucial to the stability of the kingdom; when its margins are high, Saudi Arabia’s economic growth reflects this. While countries around the world struggling with inflation and recession, the International Monetary Fund predicts that the Saudi economy will grow by more than 7.6% this year, the highest in the world.
Despite years of efforts by Crown Prince Mohammad bin Salman to diversify the economy and some success in boosting non-oil revenues, Saudi Arabia continues to rely heavily on crude exports that pay public sector wages, generous benefits for citizens and defense spending. Aramco’s revenue also helps the prince achieve his Vision 2030 infrastructure goals.
The company will pay an $18.8 billion second-quarter dividend to shareholders, as it has pledged to do since its stock market debut. The rise in profits bodes well for the Saudi government, which is Aramco’s largest shareholder.
Aramco is seen as the key to overhauling the Saudi economy. His IPO proceeds were transferred to the country’s sovereign wealth fund to invest in projects aimed at stimulating new sectors and creating new jobs for Saudi youth.
Brent crude is trading around $100 a barrel, even as Saudi Arabia-led OPEC and Russia-led non-OPEC producers have has steadily increased production levels that had been cut at the height of the pandemic. The price of oil rose sharply after Russia invaded Ukraine in February. The prices have dipped below $100 in recent weeks amid slowing economic growth in China and the United States
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 increase 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, of which Saudi Arabiaare committed to reducing their carbon emissions to avoid catastrophic levels of global warming.
“The world is crying out for affordable and reliable energy and we are answering that call,” he said, calling for 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, Aramco will always deliver,” Nasser said in a short video posted with the financial results.
Saudi Arabia currently produces around 10.5 million barrels a day, much of which is exported to Asia and its biggest customer, China. The crown prince said the kingdom’s maximum production capacity was 13 million barrels per day. Aramco says it is working to reach that cap 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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