High oil prices help Saudi Aramco earn $88B in first half

DUBAI: Saudi energy company Aramco said Sunday its profits jumped 90% in the second quarter compared to the same time last year, helping its half-year earnings reach nearly $88 billion. The increase is a boon for the kingdom and the crown prince’s spending power as people around the world pay higher oil prices at the pump.

Aramco’s net profits for the first half of the year were helped by strong second-quarter earnings that hit $48.4 billion — a figure higher than the first full half year of 2021, when profits reached just $47 billion.

The oil and gas company, which is nearly entirely state-owned by Saudi Arabia, said this sets a new quarterly earnings record for Aramco since it first floated around 5% of the company on the Saudi stock market in late 2019.

Aramco said profits were helped by higher crude oil prices and volumes sold, as well as higher refining margins. The vast oil reserves belonging to Saudi Arabia are among the cheapest to pump and produce in the world.

Aramco’s financial health is crucial to Saudi Arabia’s stability. Despite years of efforts to diversify the economy, the kingdom continues to rely heavily on oil and gas sales for revenue in order to pay public sector wages, subsidies, generous benefits to Saudi citizens, keep up its defense spending and carry out Crown Prince Mohammed bin Salman’s Vision 2030 infrastructure goals.

Brent crude has been trading at around $100 a barrel, even as OPEC, led by Saudi Arabia, and non-OPEC producers, led by Russia, have incrementally increased production levels that had been cut during the height of the pandemic.

Aramco President CEO Amin Nasser said the latest financial results reflect increasing demand for oil, even as countries around the world, including Saudi Arabia, pledge to cut their carbon emissions to avert catastrophic global warming levels driven by the burning of fossil fuels.

“The world is calling out for affordable, reliable energy and we are answering that call,” he said, before adding that Aramco expects oil demand to continue to grow for the rest of the decade, despite downward economic pressures and inflation.

“At a time when the world is worrying about energy security, you are investing in the future of our business. Our customers know that whatever happens, Aramco will always deliver,” Nasser said in a short video released with the financial results.

Saudi Arabia is currently producing around 10 million barrels per day, with much of that exported to Asia and its largest customer, China. The crown prince said last month that the kingdom’s maximum production capacity is 13 million barrels per day, and Aramco said it is working to expand its scope to one day reach that ceiling.

The company will pay a dividend of $18.8 billion for the second quarter to shareholders, as it has promised to do since its IPO. The higher profits bode well for the Saudi government, which is the main shareholder of Aramco.