Saudi oil conglomerate Aramco says its profits were down by nearly 30% in the first half of 2023
Saudi Arabia’s state-owned oil and gas giant, Aramco, has reported a substantial drop in its net income for the first half of 2023. According to the company’s financial report released on Monday, Aramco witnessed a nearly 30% decrease in its net income, amounting to $61.961 billion, as compared to the same period in the previous year.
The decline in profits has been primarily attributed to several factors, with lower crude oil prices and weakening refining and chemicals margins topping the list. The company’s report stated that these challenges impacted the bottom line, exerting considerable pressure on the revenue stream.
“The decrease was primarily a result of lower crude oil prices and weakening refining and chemicals margins. This was partially offset by a decrease in production royalties, largely due to lower average effective royalty rate and lower crude oil prices, and higher finance and other income,” the report read.
The lower crude oil prices come despite Saudi Arabia decreasing its output numerous times. In fact, the whole of the OPEC+ oil cartel cut their oil outputs by millions of barrels per day in response to US pressure to increase the output in light of an ongoing energy crisis exacerbated by the sanctions on Russia.
Saudi Arabia declared Thursday an extension of its voluntary oil production cut of one million barrels per day for an additional month, continuing its efforts to support and stabilize prices.
“Saudi Arabia will extend the voluntary cut of one million barrels per day… for another month to include the month of September,” the Energy Ministry said in a statement.
It added that the cut, initially implemented in July, could be extended or increased even further, leaving Saudi’s daily production at approximately nine million bpd.
The cut was announced after a June meeting of the 23-nation OPEC+ alliance, including Russia, with Saudi Energy Minister Prince Abdulaziz bin Salman mentioning its potential for extension.
Members of the energy group agreed in June to cut oil outputs to 40.463 million barrels per day throughout 2024.
This decision followed a move in April when several OPEC+ members voluntarily reduced production by over one million bpd, briefly bolstering prices but not resulting in a lasting recovery.
Washington has been planning on replenishing the US Strategic Petroleum Reserve SPR while aiming at lower oil prices during this year if it is “advantageous to taxpayers,” US Energy Secretary Jennifer Granholm stated back in April.
Biden’s administration planned on refilling the reserves when oil prices were between $67-$72 a barrel, which was reached back in March, but as soon as the mark hit the desired price, OPEC+ announced a surprise further production cut, sending prices $5 higher per barrel.