Oil giant Saudi Aramco said on Sunday that its profits are up more than 80% in the first three months of the year as the state-backed company benefits from volatility in global energy markets and rising oil prices following Russia’s invasion of Ukraine.
Huge first-quarter profits from the company formerly known as Saudi Arabian Oil Co., which overtook Apple last week as the world’s most valuable company, shows record net income of $39.5 billion, an increase from $21.7 billion in the same period last year.
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The figure marks the oil group’s highest quarterly profit since 2019, when the Saudi government, which owns 98% of the company, listed some of its value on Riyadh’s Tadawul stock exchange in what was then the world’s largest IPO ever.
In a statement, Aramco’s chief executive attributed the increase in profits to rising prices and the increase in the kingdom’s output, along with allies in the group known as OPEC Plus. He also seemed to suggest that the disruption of the war in Ukraine had underlined the critical role of oil and gas companies like Aramco.
“Against the backdrop of increased volatility in global markets, we remain focused on helping meet global energy demands that are reliable, affordable and increasingly sustainable,” said President and CEO Amin H. Nasser, adding that Aramco is in the midst of increasing its maximum production capacity to meet the expected growth in demand.
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Oil prices soared to a 14-year high of $139 a barrel in March immediately after the Russian invasion of Ukraine, though they later declined as Russian oil continued to flow and renewed lockdowns undermined hydrocarbon demand in China, a top importer. International benchmark Brent oil traded more than $111 a barrel on Sunday.
Shares of Aramco rose 1.85% on the earnings report on Sunday, with one stock costing 41.40 Saudi riyals, or $11.04 in the Tadawul stock market. Aramco shares have skyrocketed since the beginning of the year, making it the world’s most valuable company last week with a market cap of approximately $2.43 trillion.
The oil group said it maintained its $18.8 billion cash dividend for last year’s fourth quarter, completing one of the largest full-year cash dividends in the world. The payment is a crucial source of revenue for the Saudi government.
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Gearing, which the company defines as the extent to which its operations are financed with debt, fell from 14% at the end of last year to 8% in the first quarter.
The strong quarterly results come after reviving economic activity and the easing of global coronavirus restrictions already delivered record-year results for the state-backed company last year following the devastation of the pandemic and years of sluggish growth amid relatively lower prices.
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Skyrocketing oil prices have given the Saudi economy a welcome boost.
Saudi Arabia – the world’s largest oil exporter and de facto leader of OPEC – posted the fastest economic growth in a decade in the first quarter of the year, with gross domestic product growing 9.6% compared to the same year. period last year, according to the statistics bureau. The International Monetary Fund expects the economy of the kingdom to grow by 7.6% this year.