RIYADH: Saudi oil giant Aramco on Tuesday reported net profit of $29.07 billion in the second quarter, a slight drop from the same period last year as output remained subdued. The decrease of 3.4 percent “mainly reflects the impact of lower crude oil volumes sold and weakening refining margins”, the company said in a statement posted to the Saudi stock exchange.
Saudi Arabia, the world’s biggest crude exporter, is currently producing roughly nine million barrels per day (bpd), well below its capacity of 12 million bpd. Production averaged 8.8 million bpd in June, Riyadh-based firm Jadwa Investment said last week.
The relatively low figure reflects cuts dating back to October 2022, when the OPEC+ bloc of oil producers that Riyadh co-leads with Moscow announced it would reduce output by two million bpd to boost prices.
In April 2023, several OPEC+ members announced they would further slash production by more than one million bpd, and in June 2023, Riyadh announced an additional voluntary cut of one million bpd. “Output will remain at similar levels until at least October”, at which point an OPEC+ agreement announced in June 2024 will allow “for gradual monthly increases”, Jadwa said. Aramco is the jewel of the Saudi economy and the main source of revenue for Crown Prince Mohammed bin Salman’s Vision 2030 reform agenda, which aims to set the Gulf kingdom up for a prosperous post-oil future.
The firm’s profits help allow Saudi Arabia to finance flagship projects including NEOM, the futuristic mega-city being built in the desert, a giant airport in Riyadh and major tourism and leisure developments.
The IMF said in April that, at current production levels, Saudi Arabia’s fiscal break-even oil price would be $96.2 per barrel in 2024.
Brent, the international benchmark, was trading at $76.43 per barrel on Tuesday after Monday’s global stock market rout fuelled by US recession fears.
Yet Aramco chief executive Amin Nasser told reporters that Aramco was still “positive about the outlook for global oil demand”, pointing to “strong” demand from China.