$668m a day: Oil giant posts biggest profit by a company in history

Aramco also declared a dividend of $US19.5 billion for the fourth quarter of 2022, to be paid in the first quarter of this year.

Aramco’s results, viewed as a bellwether for the global energy market, mirror the huge profits seen at those of UK energy giant BP, America’s Exxon Mobil, Shell and others in 2022. But the sheer size of the $US161 billion profit overshadowed even its own previous results, as well as records by Apple, Vodafone and the US Federal National Mortgage Association, or Fannie Mae.

Benchmark Brent crude oil now trades around $US82 a barrel, though prices had reached over $US120 a barrel back in June. Aramco, whose fortunes hinge on global energy prices, announced a record $US42.4 billion profit in the third quarter of 2022 off the back of that price spike.

Those high prices have further strained ties between the kingdom and the United States, traditionally a security guarantor among the Gulf Arab states amid tensions with Iran. Before the midterm elections in November, the kingdom said the Biden administration sought to delay a decision by OPEC and allies including Russia to cut production that could have kept gasoline prices lower for voters — making public the typically behind-the-scenes negotiations common in the region.

President Joe Biden had warned the kingdom that “there’s going to be some consequences for what they’ve done” in terms of oil prices. However, those consequences have yet to be seen as Saudi Arabia and Iran went to China to strike a diplomatic deal Friday. US fuel prices now stand on average at $US3.47 a gallon, down just about a dollar from last year.

For the kingdom, higher crude oil prices can help fuel the dreams of Prince Mohammed, including his planned $US500 billion futuristic desert city project called Neom.

Those revenues also can go into Riyadh Air, a new airline announced Sunday by Prince Mohammed that will be under the kingdom’s Public Investment Fund and plans to fly to over 100 destinations by 2030. The Wall Street Journal, citing anonymous sources, reported Saudi Arabia may purchase up to $US35 billion worth of planes from Boeing Co.

However, they also run against the fears of activists over climate change, particularly as the United Nations’ COP28 climate talks will begin this November in the neighbouring United Arab Emirates.

Saudi Arabia has pledged to have net-zero carbon emissions by 2060, like China and Russia, though its plans to reach that goal remain unclear. Aramco’s earnings report noted it started a $US1.5 billion Sustainability Fund in October and plans a carbon-capture-and-storage facility as well.

Amnesty International’s secretary-general, Agnès Callamard, criticised Aramco’s annual profit coming amid global concerns about climate change.

“It is shocking for a company to make a profit of more than $US161 billion in a single year through the sale of fossil fuel — the single largest driver of the climate crisis,” she said in a statement. “It is all the more shocking because this surplus was amassed during a global cost-of-living crisis and aided by the increase in energy prices resulting from Russia’s war of aggression against Ukraine.”

Callamard also noted that Saudi Arabia remains one of the world’s top executioners while also remaining locked in a years-long war in Yemen and cracking down on dissent.

“These extraordinary profits, and any future income derived from Aramco, should not be deployed to finance human rights abuses, cover them up, or try and gloss over them,” she said.

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Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude. For every $US10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $US40 billion a year, according to the Institute of International Finance.

Shares in Aramco stood at $US8.74 on Riyadh’s Tadawul stock exchange. That’s down from a high of $US11.55 a share in the last year. However, that current price still gives Aramco a valuation of $US1.9 trillion — making it the world’s second most valuable company behind only Apple.

The Saudi government still owns the vast majority of the firm’s shares. Saudi Aramco publicly listed a sliver of its worth back in late 2019.

Aramco will release a comprehensive earnings report on Monday.