June 24, 2024

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Saudi Aramco profits exceed expectations on back of buoyed oil price

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Saudi Aramco’s net profits surpassed analyst expectations as it revealed the impact of deeper production cuts this summer after the kingdom moved to prop up the oil price.

The state-run company, which pumps almost 10 per cent of world oil supplies, reported a net profit of $32.6bn for the three months to September 30, exceeding the median forecast of $31.8bn by analysts.

While profits were down 23 per cent compared with a year earlier, when Russia’s invasion of Ukraine sent energy prices soaring, they were up from $30.1bn in the second quarter of this year, despite production volumes falling.

Saudi Arabia has partnered with Russia and the wider Opec+ group to make deeper cuts to crude oil production in the second half of this year, with a view to reinforcing the oil price globally, despite facing criticism from consumer countries that are battling inflation.

Saudi Aramco’s sales declined 22 per cent to SR424bn ($113bn) in the third quarter compared with the same period last year, with Aramco saying the decline “principally reflects the impact of lower crude oil prices and volumes sold”.

Prices of Brent crude fell late last year and at the beginning of 2023, but have rallied substantially since Saudi Arabia led Opec+ in cutting output this summer, including making additional voluntary output cuts they have extended to the end of the year.

Crown Prince Mohammed bin Salman, the kingdom’s de facto ruler, is widely believed to have tasked his half brother — energy minister Prince Abdulaziz bin Salman — with supporting oil prices to fund his ambitious economic reforms.

Saudi Aramco’s chief executive, Amin Nasser, who is in charge of the company day-to-day, said the “robust financial results reinforce Aramco’s ability to generate consistent value for our shareholders”.

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