12 March 2023

Oil giant Saudi Aramco notches up nearly £134bn profit in 2022

12 March 2023

Oil giant Saudi Aramco has reported that it made a 161 billion US dollar (£133.8 billion) profit last year.

The firm, known formally as the Saudi Arabian Oil Co, said in its annual report that higher crude oil prices propelled its profits.

It made the announcement on Riyadh’s Tadawul stock exchange.

In 2021, Aramco declared profits of 110 billion dollars (£91.4 billion), compared with 49 billion dollars (£40.7 billion) in 2020 when the world faced the worst of the coronavirus pandemic lockdown, travel disruptions and oil prices briefly going negative.

Benchmark Brent crude oil now trades at around 82 dollars (£68) a barrel, though prices had reached more than 120 dollars (£100) a barrel in June.

Aramco, whose fortunes hinge on global energy prices, announced a record 42.4 billion dollars (£35.2 billion) profit in the third quarter of 2022 on the back of that price spike.

Those high prices have further strained ties between the kingdom and the United States, traditionally a security guarantor among the Gulf Arab states amid tensions with Iran.

Before the mid-term elections in November, the kingdom said Biden administration had sought to delay a decision by Opec and allies including Russia to cut production which could have kept fuel prices lower for voters – making public the typically behind-the-scenes negotiations common in the region.

President Joe Biden had warned the kingdom that “there’s going to be some consequences for what they’ve done” in terms of oil prices.

However, those consequences have yet to be seen as Saudi Arabia and Iran went to China to strike a diplomatic deal on Friday.

US petrol prices now stand on average at 3.47 dollars (£2.88) a gallon, down about a dollar from last year.

Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude.

For every 10 dollar (£8.30) rise in the price of a barrel of oil, Saudi Arabia stands to make an additional 40 billion dollars (£33.2 billion) a year, according to the Institute of International Finance.

Shares in Aramco stood at 8.74 dollars (£7.26) on Riyadh’s Tadawul stock exchange before it opened on Sunday, down from a high of 11.55 dollars (£9.60) a share in the last year.

However, that current price still gives Aramco a valuation of 1.9 trillion dollars (£1.6 trillion) – making it the world’s second-most valuable company behind only Apple.

The Saudi government still owns the vast majority of the firm’s shares.

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