After Russia’s war in Ukraine and a post-pandemic rise in demand pushed crude prices skyrocketing, the oil giant Saudi Aramco announced on Sunday record profits of $48.4 billion for the second quarter of 2022.
Net income leapt 90 percent year-on-year for the world’s biggest oil producer, which clocked its second straight quarterly record after announcing $39.5 billion for Q1.
After ExxonMobil, Chevron, Shell, TotalEnergies, and Eni all reported profits in the multi-billion dollar range for the second quarter, Aramco is the most recent oil company to rake in eye-watering sums.
“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential,” said Aramco president and CEO Amin H. Nasser.
“In fact, we expect oil demand to continue to grow for the rest of the decade,” he added.
Net income rose 22.7 percent from Q1 in “strong market conditions”, Aramco said. Half-year profits were $87.9 billion, up from $47.2 billion for the same period of 2021.
Aramco will pay an $18.8 billion dividend in Q3, the same as it paid in Q2. It “continues to work on increasing crude oil maximum sustainable capacity from 12 million barrels per day to 13 million by 2027”, its earnings announcement said.
The quarterly profits, the highest since Aramco’s record-breaking IPO, beat a company-compiled analyst forecast of $46.2 billion.
Aramco shares were down about 1.0 percent at 40.4 riyals ($10.8) in early trading on the Saudi stock exchange. They are up 25 percent this year.
‘Crown jewel’
State-owned Aramco floated 1.7 percent of its shares on the Saudi bourse in December 2019, generating $29.4 billion in the world’s biggest initial public offering.
The “crown jewel” and leading source of income for the conservative kingdom temporarily supplanted Apple as the world’s most valuable company in March. It now lies second in the list with a market valuation of $2.4 trillion.
Saudi Arabia has sought to open up and diversify its oil-reliant economy, especially since Mohammed bin Salman’s appointment as crown prince and de facto ruler in 2017.
Despite raising production, Aramco has pledged to reach “operational net zero (carbon) emissions” by 2050. Carbon pollution is tallied in the country that uses the fuel, not where it is produced.
Nasser said Aramco recovered quickly from a series of attacks by Yemen’s Huthi rebels on its facilities earlier this year, including a dramatic strike in Jeddah that sent smoke billowing during a Formula One practice session in March.
“We were able to restore our production in all these facilities immediately. In a few weeks, all facilities were working and producing at full capacity,” he told a media conference call.
Earlier this month, the International Energy Agency said global oil demand will rise more than previously forecast this year as heatwaves and soaring gas prices prompt countries to switch fuels for power generation.
Oil prices have dropped by $30 per barrel from a peak in June due to growing supplies, but remain close to $100.
The OPEC group of oil-producing countries has been gradually raising production, despite pressure from Western leaders including US President Joe Biden — who visited Saudi Arabia last month — to pump more.
Biden’s trip was seen as a climb-down after he previously promised to make Saudi Arabia a “pariah” over the killing of Washington Post columnist Jamal Khashoggi by Saudi agents in Turkey in 2018.
British Prime Minister Boris Johnson has also visited Saudi Arabia since the Russian invasion in February.