Saudi Arabian oil giant Aramco reported a decrease in third-quarter profits, with revenues of $27.5 billion, down 15% from the previous year. The company cited low oil prices and weakening refining margins as the main reasons for the profit decline. Despite the drop in profits, Aramco remains a significant player in the global oil industry, with a market value of $1.7 trillion. The company’s dividends for the third quarter were announced at $20.28 billion, with hopes that the overall annual dividend will exceed $124 billion.
Although only a small portion of Aramco is publicly traded on the Tadawul stock exchange, the majority of the company is held by the Saudi Arabian government, providing wealth to the Al Saud royal family. As the world’s sixth-most valuable company, Aramco’s performance is closely watched as a bellwether for the global oil industry. Despite Crown Prince Mohammed bin Salman’s ambitious plans to diversify the kingdom’s economy away from oil sales, lower oil prices have reportedly led to potential budget deficits and a reevaluation of some of these projects. Activists have also criticized Aramco’s profits, pointing to concerns about climate change linked to the burning of fossil fuels.
Aramco’s market value has fluctuated over the past year, with stock trading at $7.31 a share on Tuesday, down from a high of over $9 earlier in the year. The company’s annual profit in 2023 was $121 billion, a decrease from the previous year’s record due to lower energy prices. Saudi Arabia’s vast oil resources, located close to the surface of the desert, make it one of the world’s cheapest places to produce crude oil. Despite this advantage, the kingdom is facing challenges in balancing its budget as oil prices remain volatile and economic diversification efforts face obstacles.
As tensions in the Middle East appear to have slightly eased and China’s economy shows signs of slowdown, oil prices have remained depressed in recent days. Benchmark Brent crude traded at around $75 a barrel on Tuesday. Aramco’s third-quarter financial results reflect the broader trends in the oil market, with revenues of $111.1 billion for the quarter. The company hopes to maintain its position as a key player in the industry, despite challenges such as fluctuating oil prices and global concerns about sustainability and climate change. With the Saudi government’s stake in Aramco providing crucial revenue, the company’s performance will continue to be monitored closely by investors and analysts in the coming months.
