Saudi Aramco’s quarterly profit drops 15pc on low oil prices

RIYADH: Energy giant Saudi Aramco reported a 15 per cent year-on-year drop in third quarter profit on Tuesday, citing prices which have stayed low despite production cuts and war in the Middle East.

The fall in net income to $27.56 billion from $32.58 billion in 2023 is the seventh consecutive quarterly drop for Aramco, one of the world’s biggest companies by market capitalisation.

Aramco is the chief source of revenue for Crown Prince Mohammed bin Salman’s Vision 2030 reform agenda, which aims to remodel the Gulf kingdom’s crude-reliant economy.

The lower third quarter profit “was mainly due to the impact of lower crude oil prices and weakening refining margins”, Aramco said in a statement to the Saudi stock exchange.

Following a series of output cuts since October 2022, the world’s biggest crude oil exporter is currently producing roughly nine million barrels per day (bpd), well below its capacity of 12 million bpd.

Yet despite lower production, as well as widening conflict in the Middle East, prices have remained low because of concerns about market oversupply.

Brent crude was priced at around $75 per barrel on Tuesday -- much cheaper than Saudi Arabia’s estimated fiscal break-even mark.

“Aramco delivered robust net income and generated strong free cash flow during the third quarter, despite a lower oil price environment,” chief executive Amin Nasser said in a statement.

The firm will maintain its $10.8 billion performance-based dividend for another quarter alongside its $20.3 billion base dividend, the statement said.

‘No supply disruptions’

Soaring energy prices following Russia’s invasion of Ukraine allowed Aramco to post record profits in 2022, before they dipped by 25 per cent last year.

Profits were down 14.5 per cent in the first quarter of 2024 and 3.4 per cent in the second quarter.