$700m profit a day: War drives oil giant’s record-breaking result

Saudi Aramco has announced the biggest quarterly profit of any publicly listed company in history thanks to surging oil prices and demand.

The state-controlled fossil fuel giant made a profit of $US48.4 billion ($68 billion) in the three months to the end of June, up 90 per cent on the same period a year earlier and equivalent to around $US500 million ($700 million) of profit every day.

Saudi Aramco is currently the second-most valuable company in the world, behind Apple.Credit:AP

Aramco’s haul almost equalled the combined profits of the five biggest Western oil companies during the same period. BP, Shell, ExxonMobil, Chevron and TotalEnergies made a combined $US51 billion in the second quarter, breaking their own profit records in the process.

The Saudi profits also comfortably eclipsed Apple’s best-ever quarter. The iPhone maker, which recently overtook Aramco as the world’s biggest company by market capitalisation, made $US34 billion in the first three months of the year.

Oil companies have been boosted by soaring demand and escalating prices since Russia’s invasion of Ukraine. The war has disrupted supplies and prompted Western sanctions on Vladimir Putin’s oil, which has restricted global supply.

Brent crude doubled from around $US60 a barrel at the start of 2021 to $US120 a barrel in June. Prices have eased back to just below $US100 a barrel in recent weeks.

Aramco chief executive Amin Nasser said: “Our record second-quarter results reflect increasing demand for our products. We expect oil demand to continue to grow for the rest of the decade, despite downward economic pressures on short-term global forecasts.”

Last week the International Energy Agency said Europe will be at the mercy of heavyweight oil producers such as Saudi Arabia this winter as a result of a steep drop in imports of Russian gas. US President Joe Biden has also been lobbying the kingdom to increase production.

Nasser warned that capacity remained limited as demand was increasing after a period of low investment in the industry.

“With the COVID restrictions in China easing up, that will add to the demand … The aviation industry will also add to the demand,” he said.

Aramco’s haul almost equalled the combined profits of the five biggest Western oil companies during the same period.Credit:AP

Aramco is almost entirely owned by Saudi Arabia but listed a small percentage of shares on the Saudi stock exchange in 2019, allowing investors to buy a stake in the company. It is worth about $US2.4 trillion, with shares up more than a quarter this year. The company kept its dividend unchanged at $US18.8 billion.

Nasser said investment in expanding oil output was “essential” as demand continues to grow.

In March, Aramco pledged to increase investment by around 50 per cent this year. It said it would boost capital expenditure to $US40-$US50 billion, with further growth expected until around the middle of the decade.

“While there is a very real and present need to safeguard the security of energy supplies, climate goals remain critical, which is why Aramco is working to increase production from multiple energy sources – including oil and gas, as well as renewables and blue hydrogen,” Mr Nasser said.

The company is looking to work with partners to invest in carbon capture, renewable energy, and hydrogen production as part of its goal to reach net zero carbon emissions from operations by 2050.

Aramco made $US87.9 billion in the first six months of the year, almost surpassing its pre-pandemic annual profits in 2019.

It is using its record cash haul to cut debt and invest in an expansion of its maximum oil production capacity by million barrels a day to 13 million.

Telegraph, London

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Most Viewed in Business

From our partners

Source: Read Full Article