Oil giant Saudi Aramco on Tuesday reported first-quarter net profit of $27.27 billion, down 14.5 percent from the same period last year, as the Gulf kingdom maintained its black gold output.
“Net profit for the first quarter of 2024 amounts to SAR 102.27 billion ($27.27 billion), compared to SAR 119.54 billion ($31.88 billion) for the same quarter in 2023,” the group said in a document which was sent to the Saudi Stock Exchange, explaining that “the decline was mainly due to a reduction in the volume of crude oil sold.” The world’s largest crude oil exporter, Saudi Arabia, currently produces about nine million barrels per day (bpd), well below its capacity of 12 million bpd.
Serial cuts
This follows a series of production cuts dating back to October 2022, when OPEC+ oil-producing countries, which Riyadh co-leads with Moscow, announced a two million barrel per day cut in output to drive up costs.
In addition to this reduction, Saudi Arabia and several other members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+) agreed in April 2023 to reduce their production by more than one million barrels per day.
After a cartel meeting in June 2023, Saudi Arabia announced a further cut of 1 million barrels per day. In March, the Saudi Ministry of Energy said the latest reduction, which came into effect in July 2023, would be extended until the second quarter of 2024, after which “these additional reduction volumes will be gradually returned depending on market conditions.
Post-oil in dotted lines
Aramco is the crown jewel of the Saudi economy, and the country’s de facto ruler, Crown Prince Mohammed bin Salman, desperately needs oil revenues to finance an ambitious program of economic and social reforms known as ‘Vision 2030’, which The crisis aims to prepare the country for the post-oil era. Aramco sold 1.7% of its shares on the Saudi stock market in December 2019, raising $29.4 billion in the world’s largest initial public offering.
Saudi Arabia recently transferred a new tranche of Aramco shares to the Public Investment Fund (PIF), the center of the kingdom’s broad reform programme. In December, the Saudi Finance Ministry said it expected budget deficits until 2026 as it maintains high spending on reforms. Saudi Arabia’s GDP fell 1.8% year-on-year in the first quarter of 2024 compared to 2023, the General Statistical Authority said in a preliminary estimate released last week.
“This decline is mainly due to a decline in oil activities of 10.6%,” the same source said. Saudi Arabia has pledged to reach net-zero carbon emissions by 2060, prompting some skepticism among environmentalists.
Aramco aims to achieve carbon neutrality of its operations by 2050, excluding emissions from the oil exported and burned by its customers.
Sami Nemli with Agency / ECO Inspirations
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