Saudi Aramco Profits Decline Amid Reduced Oil Production

Saudi Aramco, the global oil giant, has reported a decline in profits following a reduction in crude oil sales and weakening refining margins.

The leading oil producer announced a net profit of $29.1 billion for the second quarter, a slight dip from $30.1 billion recorded in the same period last year. This decrease was less than what analysts had anticipated.

The company’s output measured 12.3 million barrels of oil equivalent per day, incorporating some gas production, down from 13.5 million barrels the previous year. Previously, Saudi Aramco abandoned a massive investment strategy aimed at increasing production from 12 million barrels a day to 13 million by 2027.

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Despite the profit reduction, Saudi Aramco proceeded with a dividend payout of $31.1 billion, up from $19.5 billion a year earlier. This includes a performance-linked return of $10.8 billion, scheduled for disbursement before the end of September.

In the second quarter of last year, Saudi Aramco introduced a performance-based dividend to boost shareholder returns, primarily benefiting the state and the national sovereign wealth fund.

The company enjoyed higher oil prices during the June quarter, driven by concerns over escalating Middle East tensions, elevating the average realized crude price to $85.7 per barrel from $78.8 a barrel the previous year.

However, Brent crude oil prices, the global benchmark, declined sharply last week following weak economic indicators from the US. By mid-morning trading on Tuesday, Brent crude was slightly down by $0.05, or 0.07%, at $76.25 per barrel, while West Texas Intermediate saw a slight increase of $0.11, or 0.15%, at $72.94.

Amin H Nasser, CEO of Saudi Aramco, stated that the company made significant strides in several strategic areas during the second quarter, including enhancing gas production and investing in cleaner energy types.

In July, Saudi Aramco raised an additional $12.4 billion through a share offering to support investments in emerging industries and diversify Saudi Arabia’s revenue streams away from oil and gas, aligned with the Vision 2030 initiative.

Last week, OPEC+ energy ministers agreed to maintain most production cuts until the end of next year to support prices amid weak demand growth.

Saudi Aramco uniquely holds exclusive rights to tap into the kingdom’s vast oil reserves. Its debut on the Saudi Tadawul exchange in December 2019 was the largest initial public offering globally.

Shares traded on the Riyadh exchange closed 1.5% higher on Tuesday, reaching 27.20 riyals (£5.70).

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