Saudi Aramco Reports 38% Profit Plunge as Energy Prices Cool

　　Key Points:

　　Saudi Aramco's net profit dropped 40% in Q2 2023 due to lower crude prices and weaker margins.The company declared a $19.5 billion dividend payout to shareholders for Q2, up from $18.8 billion in Q2 2022.Aramco plans to initiate performance-based dividends starting Q3, totaling $9.87 billion.The Saudi state remains Aramco's largest shareholder, owning over 90% of the company.Oil giants experienced record profits during the energy crisis but have faced declining revenues recently.Saudi Aramco, the world's third most valuable company, witnessed a 38% decline in its profits during the second quarter of 2023 as energy prices cooled down.

　　In the past year, spiraling energy costs have burdened household budgets, while oil and gas producers, including Aramco, have reaped substantial windfalls. In 2022, Aramco recorded a remarkable profit of $161 billion, the highest ever achieved by an energy company.

　　However, on Monday, the company, valued at over $2.1 trillion, reported a drop in its net profit to 113 billion riyals ($30 billion) for the three months ending in June. This represents a significant 40% decrease compared to the same period last year.

　　Aramco attributed the decline to lower crude oil prices and weaker margins in refining and chemicals.

　　Despite the profit reduction, Aramco announced a $19.5 billion dividend payout to shareholders for the second quarter, to be delivered in the third quarter. This exceeds the $18.8 billion dividend paid out in Q2 2022.

　　Shareholders will also receive $19.5 billion in dividends for the first quarter, resulting in a total payout of $39 billion for the first half of 2023, up from $37.5 billion in the previous year.

　　From the third quarter onward, Aramco intends to implement performance-based dividends for six consecutive quarters, commencing with a $9.87 billion payout. The company described its dividend payouts as "sustainable and progressive."

　　Aramco CEO Amin Nasser stated, "Our strong results reflect our resilience and ability to adapt through market cycles. We continue to meet the needs of customers worldwide with high reliability. For our shareholders, we aim to start distributing our first performance-linked dividend in the third quarter."

　　The Saudi state remains Aramco's primary shareholder, directly owning over 90% of the company. Additionally, the sovereign Public Investment Fund and its subsidiary Sanabil hold an 8% stake, according to news agency Reuters.

　　Amid falling profits, Aramco joins other energy giants, such as Shell and BP, in boosting dividends. Following Russia's invasion of Ukraine in February 2022, much of the world, especially Europe, faced an energy crisis.

　　The ostracization of Moscow, a major energy producer, coupled with economic sanctions, including a ban on Russian oil imports, destabilized energy markets.

　　Oil giants saw record profits in 2022 due to the energy crisis, but cooling energy costs have recently dented their revenues.

　　On Monday, Brent crude oil prices saw a slight decline, trading just below $85 per barrel by 9:30 a.m. EST.

　　Brent, a benchmark for global oil trade, has been recovering in recent weeks after dipping below $72 a barrel. In mid-2022, the price surpassed $100.

　　Quincy Krosby, chief global strategist for LPL Financial, expressed optimism about Aramco's projection of a resilient oil market.

　　He stated, "The global economic backdrop, as central banks complete their respective rate hike campaigns, coupled with a softer dollar, is expected to provide a markedly more resilient underpinning for oil prices."

　　Krosby added, "With tighter supplies, oil prices have begun a steady ascent with expectations that prices will end the year higher as momentum—and the global economy—continue to recover. Saudi Arabia, the de facto head of OPEC+, has signaled it will continue to adjust production in order to 'stabilize' prices, but it's clear they want to propel prices toward $90 a barrel."