Saudi oil company Aramco posts $42.43 billion profit in the third quarter of the year
Saudi Aramco, the world's largest oil company, reported a net profit of $42.43bn for the third quarter of the year, a 39.4% improvement on the same period last year, according to a breakdown of the company's quarterly earnings report announced on Tuesday.
The third-quarter figure is down 12.3% from the second quarter, when the company posted a record profit of $48.4 billion thanks to a sharp rise in oil prices due to the war in Ukraine and increased demand in the wake of the pandemic. However, year-to-date profit was $130.342 billion, up 68% from a year earlier. Aramco said the results were mainly due to higher crude oil prices and volumes sold. In addition, it was partly offset by a higher average effective royalty rate, due to stronger crude oil prices and higher sales volumes, which resulted in an increase in production royalties.
Aramco is Saudi Arabia's main source of revenue. However, Crown Prince Mohammed bin Salman has taken steps to further diversify the oil-producing nation's economy. The Saudi kingdom is the leader of the OPEC group of oil exporters. Together with other countries, especially Russia, it forms OPEC+. In early October, the organisation agreed to cut production in November. The move was widely seen as a diplomatic blow to the US, which Washington has clearly opposed.
Aramco chairman and CEO Amin H. Nasser said that while global oil prices have been affected by continuing economic uncertainty, demand for oil "will continue to grow for the rest of the decade, given the global need for more affordable and reliable energy," he said. "Against a backdrop of low global investment in our sector, we are expanding our oil and gas production capabilities for the long term," Nasser said, explaining that the board's downstream expansion plans continue to move forward with the aim of meeting global demand for petrochemicals, which will be "critical" to the energy transition.
تعكس #نتائج_أرامكو وأرباحها القوية والتدفقات النقدية الحرة القياسية للربع الثالث قدرتنا على تحقيق أعلى قيمة من خلال إنتاجنا في قطاع التنقيب والإنتاج منخفض التكلفة، الذي يعد من بين الأقل في كثافة الانبعاثات الكربونية، إضافة للتكامل الإستراتيجي مع قطاع التكرير والمعالجة والتسويق
— أرامكو (@saudi_aramco) November 1, 2022
The US government has criticised the Saudi Arabian leadership for being aware that a cut in oil production would "increase Russian revenues and weaken the effectiveness of sanctions (against Russia)". US President Joe Biden said there would be "consequences" and a reassessment of relations with Saudi Arabia. The Riyadh government claimed at the time that the decision to curb oil production was taken "purely for economic reasons". It is in no way a question of 'the Kingdom's involvement in international conflicts'. Postponing the reduction in production would have resulted in economic losses.
Rising oil revenues are bringing considerable economic growth to Saudi Arabia. According to a preliminary government estimate, the economy grew by 8.6% in the third quarter compared to the same period last year. The International Monetary Fund (IMF) forecasts gross domestic product (GDP) growth of 7.6% for Saudi Arabia this year. Following the announcement, Aramco's shares traded 0.14% lower to end Tuesday's session at a price per share of $9.27.
Not only Aramco has benefited from rising hydrocarbon prices, but US oil companies such as ExxonMobil and Chevron also closed the third quarter of 2022 with strong increases in their respective earnings, thanks to the boost from higher energy prices, according to information from the companies in communicated shipments. In the case of ExxonMobil, net attributable profit between July and September reached $19.66 billion, almost three times higher than a year earlier. Chevron's net profit in the third quarter of 2022 soared to 11.231 billion dollars, 83.8% more than in the same period of 2021.
