Swara Garge, Pune
Saudi Arabia’s state-run oil giant, Aramco, reported a nearly 40% decline in profit in Q2. On Monday, the company released its net profit for the second quarter of the year. In a report submitted to the Saudi Stock Exchange, Aramco has attributed this drop to weak margins in refining and chemicals and mainly lower oil prices.
A week ago, Fortune magazine named Armaco as the second largest company in terms of revenue. It was a step behind Walmart and surpassed Amazon, State Grid, Apple and Shell.
This government-owned company is a Saudi Arabian public petroleum and natural gas company based in Dhahran. The business generated a net income of 112.8 billion Saudi riyals ($30 billion), down 37.8% from the second quarter of 2022’s figure of 181.6 billion riyals ($48 billion). Despite this, Aramco increased its paid dividend.
In the second quarter of 2022, most oil corporations reported high or record-breaking profitability after Western sanctions against Russia, a key exporter, pressured an already undersupplied global market and drove up the price of crude and natural gas.
Aramco’s sales were down from 562 billion riyals ($150 billion) in the second quarter of 2022 to a little over 400 billion riyals ($106 billion). Despite the net profits earned by the company, the drastic fall in profit percentage can be seen as a setback.
According to the pledges from Saudi Arabia and Russia, a limit on supplies for an additional month was expected in order to further constrict markets throughout the world. Oil futures are presently at their highest levels since mid-April. On Monday, the price of Brent was around $86 per barrel.
Around 40% of the world’s crude is produced by OPEC, which de facto consists of allies led by Russia and the Saudi-led Organization of the Petroleum Exporting Countries. Since late last year, the group has been reducing supplies to support the market.
Saudi Arabia’s Crown Prince and Vision 2030’s chief architect, Mohammed bin Salman, donated 8% of Aramco to the $700 billion sovereign wealth fund during the previous two years to support it as it finances the vast infrastructure projects.