Saudi Aramco’s Q1 Profit Growth Driven by Soaring Oil Prices

On Sunday, Saudi Aramco announced an 82% rise in first-quarter net income, driven by rising oil prices that saw the Saudi energy giant become the world’s largest market capitalization.

Its net income was $39.5 billion, compared to $21.7 billion in the same period in 2021, “primarily due to higher crude oil prices and sales volumes, and improved downstream margins ( processing and distribution, editor’s note),” Saudi Aramco said in a statement. release.

This is a record since the IPO of the world’s largest oil exporter in 2019.

The jump in profits comes on the heels of a series of favorable economic announcements for Saudi Arabia, where a booming oil sector is maintaining the highest growth rate in a decade.

Aramco’s latest financial results were released four days after the company toppled Apple as the world’s most valuable company with $2.43 trillion in shares compared to the US company’s $2.37 trillion.

In March, the Saudi giant announced a 124% increase in net profit in 2021 compared to the previous year.

9.6% growth in the first quarter

However, the company, the kingdom’s flagship and a key source of state revenue, is facing security concerns as a Saudi-led military coalition wages war against Yemen’s Houthi rebels, who have repeatedly attacked the kingdom.

In 2019, airstrikes announced by the Houthis on two Aramco facilities in eastern Saudi Arabia temporarily halted half of the kingdom’s oil production.

In March, a Houthi attack on Aramco facilities further caused a “temporary” drop in production.

The oil giant also announced on Sunday that it will raise its capital by issuing 20 billion shares of stock distributed free of charge to shareholders, at a ratio of one share offered to ten shares held.

He also revealed that $18.8 billion in dividends would be paid in the second quarter.

“With increased volatility in global markets, we remain committed to meeting the global demand for reliable, affordable and increasingly sustainable energy,” said Amin Nasser, Chairman and CEO of Aramco.

In early May, Saudi Arabia reported its highest growth rate in a decade as a booming oil sector delivered 9.6% growth in the first quarter compared to the same period in 2021.

Expected GDP growth of 7.6%

The biggest oil exporter is resisting US demands to increase production in an attempt to contain prices that have skyrocketed since the start of Russia’s war in Ukraine.

In this context, Saudi Arabia and the United Arab Emirates declared their commitment to the Organization of the Petroleum Exporting Countries (OPEC), led by Riyadh and Moscow, thus underscoring their growing independence towards their traditional ally, America.

Saudi Arabia’s gross domestic product (GDP) is expected to grow by 7.6% in 2022, according to an estimate by the International Monetary Fund (IMF) in April.

The kingdom has sought to both open up and diversify its oil-dependent economy, especially since the appointment of Mohammed bin Salman as crown prince in 2017.

In December 2019, Aramco listed 1.7% of its shares on the Saudi Stock Exchange, raising $29.4 billion (€26.5 billion), the largest IPO in history.

In February, the kingdom transferred a 4% stake in Aramco, worth $80 billion, to the sovereign wealth fund, a move seen as a possible prelude to more openness on the part of the oil giant.

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