Saudi Aramco, the world’s largest oil company, saw its profits plummet by a staggering 25% in 2023, hitting $121 billion after a record-breaking year in 2022. However, this figure still stands as the second-highest profit ever for the state-backed energy behemoth.
The steep decline in profits can be attributed to two key factors: lower oil prices and reduced production. After peaking at $130 a barrel in 2022, amid the fallout from Russia’s invasion of Ukraine, oil prices retreated to around $85 per barrel in 2023. Additionally, Saudi Aramco intentionally cut back on production to support global oil prices, further impacting its bottom line.
Despite the challenging environment, Aramco’s resilience and agility enabled it to maintain healthy cash flows and profitability levels, according to CEO Amin Nasser. The company plans to boost dividends to shareholders by nearly a third, reaching an impressive $98 billion.
As Saudi Arabia aims to diversify its economy, Aramco is exploring opportunities in renewable energy investments within the kingdom, with announcements expected later this year. However, the oil giant’s sights are also set on China, where demand for oil is on the rise.
“So far, we are in the early part of 2024; demand is healthy and growing in China,” Nasser told journalists, adding that the company is actively seeking investment opportunities in the Asian powerhouse. Saudi Aramco already holds stakes in Chinese refineries.
Nasser expressed optimism about the global oil market in 2024, anticipating a “fairly robust” demand, marginally higher than the previous year. Additionally, discussions are underway regarding a potential stake in the joint venture between French carmaker Renault and China’s Geely, which produces hybrid car engines.
While Saudi Aramco’s profits took a hit in 2023, the company remains a formidable force in the energy industry, with its eyes firmly set on capitalizing on China’s growing appetite for oil and diversifying its investments in renewable energy.
