Saudi Aramco, the state-owned oil giant, experienced a 15.4% decrease in net profit in the third quarter due to lower crude oil prices and weakening refining margins. Despite this decline, the company maintained a dividend of 31.05 billion, which was good news for the Saudi government and the kingdom’s sovereign wealth fund, the Public Investment Fund, as they are the main beneficiaries of this dividend.
The company’s net income for the July-September period was $27.56 billion, slightly higher than the estimated $26.9 billion, but still a 5% drop from the previous quarter. This decrease was attributed to lower global oil prices, weaker demand, and OPEC+ production cuts led by Saudi Arabia. The average selling price of oil dropped from $85 per barrel in the second quarter to $78.7 per barrel in the third quarter.
Despite the decline in profit, Aramco managed to offset some of the losses through a reduction in expenses and production royalties. The company’s earnings before Interest and Taxes (EBIT) were down 17% year-on-year to $51.45 billion in the third quarter. Additionally, Aramco increased its capital expenditure guidance by 20% to $13.23 billion.
The company’s stock price traded at 27.45 riyals following the announcement, showing a slight decrease from the previous day. This trend in declining profits was seen across oil majors, as crude prices and refining margins took a hit in the third quarter. Aramco’s CEO, Amin Nasser, expressed satisfaction with the company’s performance despite the challenging oil price environment.
These revenues from Aramco will play a crucial role in supporting the Saudi economy, especially as the country undergoes a diversification process under Crown Prince Mohammed bin Salman’s Vision 2030 scheme. The scheme aims to reduce the kingdom’s dependence on oil revenues by investing in high-cost infrastructure projects. Earlier forecasts for the Saudi economy had to be revised, with growth projected at 0.8% in 2024 and a budgetary shortfall of 2.9% of GDP.
Overall, despite the decline in profits, Saudi Aramco remains a key player in the global oil market and continues to support the Saudi economy through its dividends and investments in various projects. The company’s ability to navigate through challenging market conditions highlights its resilience and commitment to generating value for its stakeholders.
