Saudi Aramco, the Saudi Arabian Oil Company, said in a report on Sunday that the company’s net profit in the second quarter of this year decreased by about 73.4%. This figure was higher than expected.
Aramco also announced that capital expenditures will be between $25 billion and $30 billion this year.
Companies and organizations spend these funds on the purchase, maintenance and optimization of fixed assets such as buildings, land, equipment and vehicles.
Aramco, the world’s largest oil exporter, has declared that the rapid growth of the coronavirus pandemic has reduced demand for oil, natural gas and oil derivatives. However, according to Amin Nasser, the managing director of Saudi Aramco, by reducing restrictions and reopening business, the country is seeing a slight improvement in the energy market.
The drop in the oil market has caused large companies to decrease costs
Saudi Aramco’s net profit in the second quarter of 2020 reached nearly $6.6 billion; This figure was close to $93 billion last year.
At the end of the second quarter of this year, the price of a barrel of Brent decreased by about 38% compared to the same period last year. Meanwhile, members of the Organization of the Petroleum Exporting Countries and major non-member producers tried to improve prices and reduce oversupply. They have reduced their daily production by nearly 10 million barrels per day since May.
Aramco’s shareholder profit in the second quarter of 2020 totaled $19 billion. The slump in the oil market has caused large companies to cut costs. For instance, BP, the multinational oil and gas company in the UK has halved its dividends. The company recorded a loss of $6.7 billion in the second quarter of the year.
In mid-December 2019, the Saudi government earned $25.6 billion by selling 1.5 percent of Aramco shares in the Riyadh stock market.
The price of Aramco shares in the initial public offering was 32 Saudi riyals. This decreased with the arrival of the corona and the stagnation of the oil market.
In early trade on Monday, crude oil prices registered some gains. WTI crude futures increased by 49 cents, or 1.2%, and was trading at $41.71 a barrel. Meanwhile, Brent crude futures rose by 40 cents, or 0.9%, and was trading at $44.80 a barrel.
Both contracts saw a decline on Friday, hurt by demand concerns. Brent ended the previous week with an increase of 2.5%, and WTI increased by 2.4%.
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