Saudi oil giant Aramco announced on Sunday that it generated $121 billion in profit last year, a decrease from its record-breaking $161 billion profit in 2022, primarily due to lower energy prices. Despite the dip, this still marks Aramco’s second-highest profit ever. The company attributed the decline to reduced crude oil prices, lower sales volumes, and weakened margins in refining and chemicals.
As part of the OPEC+ alliance, Aramco and other members have been cutting production in efforts to bolster global energy prices. However, this strategy has also posed challenges for Saudi Arabia as it pursues ambitious development projects under its crown prince’s leadership to reduce dependence on oil revenues.
Despite the lower profit in 2023, Aramco increased dividends to its shareholders, distributing over $31 billion in the fourth quarter alone. The company’s revenue for the year totaled $440 billion, down from $535 billion in 2022.
Aramco’s CEO, Amin H. Nasser, highlighted the company’s resilience and agility in maintaining healthy cash flows and profitability amid economic challenges. Aramco, also known as the Saudi Arabian Oil Co., reported an average daily output of 12.8 million barrels of oil, in compliance with the Saudi government’s directive to maintain production levels, despite earlier plans to increase output.
Saudi Arabia, a key player in the OPEC cartel, has collaborated with Russia and other non-OPEC countries to limit oil production, aiming to bolster global oil prices. Despite these efforts, benchmark Brent crude traded below $82 a barrel on Sunday.
Aramco, the Saudi oil giant, boasts a market value of $2 trillion, ranking it as the world’s fourth most valuable firm, trailing behind Apple, Microsoft, and Nvidia. Its stock traded slightly up on the Tadawul stock exchange at $8.64 per share on Sunday.
Benefiting from its vast oil reserves, located close to the surface in its expansive desert terrain, Saudi Arabia boasts one of the world’s lowest production costs for crude oil. Crown Prince Mohammed bin Salman aims to leverage the country’s oil wealth to diversify its economy away from oil dependency, evident in projects like the planned $500 billion futuristic city, Neom.
However, the profitability of Aramco has drawn criticism from activists amidst global concerns about the environmental impact of fossil fuel consumption and its contribution to climate change.
In a recent development, Prince Mohammed transferred an additional 8% of Aramco shares to the kingdom’s prominent sovereign wealth fund, valued at over $160 billion. While the majority of the company remains under the ownership of the Al Saud royal family, a portion is traded on the Tadawul stock market.