Saudi oil company Aramco earns $39.5 billion in the first quarter of the year

The state-owned firm is making the most of the international isolation imposed on its direct competitor, Russia, and raising production gradually

The Aramco refinery in Ras Tanura, in Saudi Arabia, in a file image.
The Aramco refinery in Ras Tanura, in Saudi Arabia, in a file image.Ahmed Jadallah (REUTERS)

Soaring oil prices have led the Saudi oil giant Aramco to earn $39.5 billion (almost €38 billion) in the first quarter of the year, an 82% increase over the same period in 2021 and its best results since the company went public in 2019. The quarterly report came on the same week that Aramco overtook Apple as the world’s most valuable company.

The oil company said in a statement that its net income almost doubled from the $21.7 billion (€20.8 billion) it earned in the first three months of 2021, mainly driven by higher crude oil prices, a greater volume of sales and better margins in downstream (refining and marketing). Aramco said it will distribute a dividend of $18.8 billion (€18,1 billion).

High oil prices had also caused the profits of the oil company to skyrocket in 2021, up to 124% from the previous year, a period of global crisis caused by the Covid-19 pandemic.

Benefiting from global situation

Around 98% of shares in Aramco, which is valued at $2.5 billion (four times more than the value of Spain’s entire blue-chip index Ibex 35) are state-owned. Saudi Arabia is indirectly benefiting from Russia’s international isolation. Moscow, Saudi Arabia’s biggest competitor, is being forced to apply a discount of around 30% on its sale price as it struggles to find buyers for its oil.

Saudi Arabia is making the most of this situation. While most of its exports normally go to Asia, in today’s rapidly changing market Riyadh now has a golden opportunity to tap into its vast reserves (among the largest on the planet) and low extraction costs (among the lowest in the world).

Unlike other major producers, Saudi Arabia still has some leeway to increase its oil extraction. It has so far refused to open up the tap completely, like the main buyers have been asking it to do, but Aramco has ramped up production by 20% to reach 10.2 million barrels a day between January and March. The company’s goal is to raise extraction by 30% between now and 2027 and to double gas extraction by 2030. At current prices – oil is nearly 50% more expensive than a year ago and the price of gas has quintupled – that is a lot of money.

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