Saudi Aramco’s second-quarter profits for 2021 have nearly quadrupled compared to the same period last year, returning to pre-pandemic levels thanks to increased oil prices.
The company’s triumph comes after its debts grew last year when Saudi Arabia was hit by a double whammy of low pricing and significant production cuts caused by the coronavirus pandemic.
Aramco reported on Sunday that its net profit increased to $25.5 billion in the second quarter of the year, up from $6.6 billion in the same quarter of 2020, primarily to a stronger oil market, improved refining and chemicals margins, and the relaxation of Covid-19 limitations.
The business reported a net profit of $24.7 billion in the second quarter of 2019, before global economies were impacted hard by Covid-19 restrictions.
“Our second-quarter results (for 2021) indicate a robust resurgence in global energy demand, and we are entering into the second half of 2021 more resilient and adaptable, as the global recovery gains momentum,” said Aramco CEO Amin Nasser in a statement.
Aramco, like other major oil conglomerates such as ExxonMobil, Royal Dutch Shell, and TotalEnergies, has announced increased earnings this year, riding a wave of higher prices amid recovering demand.
According to the announcement, it announced “a 288% increase in net income from the same quarter last year to $25.5 billion and announcing a dividend of $18.8 billion.”
The news on Sunday comes around two months after the business announced a $6 billion raise from its first dollar-denominated Islamic bond sale, as well as a 30% increase in first-quarter profits earlier this year.
Aramco, the kingdom’s cash cow, reported a $21.7 billion net profit in the first three months of the year in May.
The energy behemoth reported a 44.4 percent drop in 2020 net profit, putting additional strain on government finances as Riyadh pursues multibillion-dollar programmes to diversify the economy.
The world’s biggest oil producers agreed last month to maintain modest supply increases beginning in August, reaching a compromise after the United Arab Emirates rejected a deal.
OPEC planned to increase output by 400,000 barrels per day (BPD) per month beginning in August to help fuel a global economic rebound as the pandemic subsides.
According to Britain’s COP26 President Alok Sharma, the results come a day before a UN report on climate change, which will provide the world community its clearest ever warning about the dangers of accelerated global warming.
Aramco makes a statement
Aramco and its assets, long regarded as the kingdom’s economic “crown jewel,” were originally firmly government-controlled and considered off-limits to international investment.
However, with the ascension of Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto ruler, who is speeding up attempts to fulfil his “Vision 2030” reform agenda, the country has demonstrated a willingness to yield some power.
Aramco previously sold a portion of its shares on the Saudi market in December 2019, earning $29.4 billion for 1.7% of its shares.
In April, the company announced a $12.4 billion deal to sell a minority stake in a newly created oil pipeline business to a consortium led by EIG Global Energy Partners of the United States.
In June, Aramco announced that it had “successfully generated $6 billion through the issuance of US dollar-denominated sharia-compliant securities to top institutional investors.”
Prince Mohammed announced earlier this year that the monarchy would sell more Aramco shares.
Some commentators have expressed alarm about previous drone and missile strikes on Saudi Aramco installations in the country, which were claimed by Yemen’s Huthi rebels.
On Sunday, Aramco stated that it had reached “100% reliability in the delivery of crude oil and other goods in the second quarter of 2021.”
Concerns about hacks have also grown, with Saudi Aramco acknowledging last month that business data had been exposed from one of its contractors. However, the business stated that it had “no effect” on operations.
When the coronavirus epidemic hit early last year, oil prices fell as demand for crude fell.
They have since rebounded and are now trading at or above $70 per barrel.