Saudi Aramco follows big oil rivals with profit surge

CEO Amin Nasser. Image: Saudi Aramco

Saudi Aramco followed its Big Oil competitors with bumper earnings, boosted by a recovery in oil and chemical prices.

The world’s biggest energy company made net profit of 95.5 billion riyals (US$25.5 billion) in the second quarter, the highest level since the end of 2018. Free cash flow rose to $22.6 billion, above the state-controlled firm’s quarterly dividend of $18.8 billion for the first time since the start of the coronavirus pandemic.

The reopening of major economies has triggered a surge in commodity prices, with crude up around 40 per cent this year. In the past two weeks, oil companies such as BP plc, Chevron Corporation and Royal Dutch Shell plc have said they will increase share buybacks and payouts, confident the worst of the pandemic is over.

Aramco’s annual dividend of $75 billion, the world’s largest, is a crucial source of funding for Saudi Arabia. The government, which owns 98 per cent of the company, is trying to narrow a budget deficit that ballooned last year as energy prices tanked with the spread of the virus.

The results “reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum,” CEO Amin Nasser said in a statement on Sunday. “I remain extremely positive about the second half of 2021 and beyond.”

Still, the pandemic is “clearly far from over,” Nasser said later on a call with reporters. Oil just had its worst week since October as the spread of the delta variant, especially in China, clouds the short-term outlook. Brent crude fell seven per cent to $70.70/bbl.

Global oil demand remains below pre-Covid levels, but should reach near-record levels of 100 million barrels a day next year, Nasser said.

© 2021 Bloomberg L.P.

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