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Thursday, July 18, 2024

In the first quarter of 2021, Saudi Aramco announced a stunning net income of $31 billion, illustrating the dominance of their oil industry


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Oil giant Saudi Aramco reported a Q1 profit of $31.88 billion (€28 billion), a decrease from Q1 of the previous year when they earned $39.47 billion. This downturn was attributed to lower international petroleum prices. Their Q4 profit was $30.73 billion.

Amin H Nasser, President and CEO of Aramco, commented that “reliability, cost-efficiency, and our capacity to adjust to the market have enabled us to generate strong cash flows and strengthen our balance sheet.”

They also believe that their low-cost production methods put them in a great position to endure any fluctuations in commodity prices.

As the holder of vast oil reserves close to the surface of their deserts, Saudi Arabia gains a $40 billion annual bonus for each 10 dollar rise in the price of a barrel of oil, according to the Institute of International Finance. Last year, Aramco earned an astonishing $161 billion, which caused an outcry from climate activists. Nasser insisted they are “working to reduce the carbon footprint of our operations”, and that “oil and gas will remain crucial components of the global energy mix for the foreseeable future.”

The surge in energy prices was due to Russia’s war in Ukraine in 2022, leading to sanctions that limited the sale of their oil and gas in the West. Sadly, current oil prices have decreased due to inflation-controlling interest rate hikes by the US and other central banks, with Brent crude currently trading at around $76 a barrel.

In the Tadawul stock exchange, Aramco stock stands at $9.55 a share, giving the company a $2.1 trillion market capitalisation and putting them just behind Apple and Microsoft for the highest market capitalisation in the world. On top of their existing dividend, Aramco has also announced the introduction of performance-based dividends for their shareholders. Their fourth-quarter dividend was a total of $19.5 billion.

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