Oil giant slammed after hitting record $161 billion

Aramco also announced a $19.5 billion dividend for the fourth quarter of 2022, which is expected to be paid in the first quarter of this year.

Aramco’s results, which are seen as a guide for the global energy market, reflect huge gains in 2022 for British energy giant BP, American Exxon Mobil, Shell and others. But the sheer size of the $161 billion gain overshadowed even its own previous results, as well as records from Apple, Vodafone, and the US Federal National Mortgage Association or Fannie Mae.

Benchmark Brent crude is now trading around $82 a barrel, despite prices hitting over $120 a barrel in June. Aramco, whose fortunes depend on global energy prices, announced a record profit of $42.4 billion in the third quarter of 2022 on that price hike.

Those high prices have further strained relations between the kingdom and the United States, which have traditionally been a guarantor of security among the Arab Gulf states amid tensions with Iran. Ahead of November’s midterm elections, the kingdom said the Biden government was trying to delay a decision by OPEC and its allies, including Russia, to cut production, which could keep voters’ gasoline prices lower — and the typical negotiations behind released in the scenes that are common in the US region.

President Joe Biden had warned the Kingdom that there will be “some consequences for what they have done” when it comes to oil prices. Those ramifications are yet to be seen, however, as Saudi Arabia and Iran went to China on Friday to reach a diplomatic deal. U.S. fuel prices are now averaging $3.47 a gallon, down just about a dollar from last year.

For the kingdom, higher crude oil prices may help fuel Prince Mohammed’s dreams, including his proposed $500 billion project for a futuristic desert city called Neom.

That revenue can also flow into Riyadh Air, a new airline announced by Prince Mohammed on Sunday that falls under the kingdom’s public investment fund and plans to fly to over 100 destinations by 2030. The Wall Street Journalreported, citing anonymous sources, that Saudi Arabia is purchasing aircraft worth up to $35 billion from Boeing Co.

But they are also fighting back against activists’ fears about climate change, especially as the United Nations’ COP28 climate talks begin in November in the neighboring United Arab Emirates.

Saudi Arabia has committed to net-zero carbon emissions by 2060, like China and Russia, although its plans to achieve that goal remain unclear. Aramco’s earnings report said it launched a $1.5 billion sustainability fund in October and is also planning a carbon capture and storage facility.

Amnesty International Secretary-General Agnès Callamard criticized Aramco’s annual profit amid global climate change concerns.

“It’s shocking for a company to make more than $161 billion in profit in a single year from the sale of fossil fuels – the biggest single driver of the climate crisis,” she said in a statement. “It is all the more shocking given that this surplus has been accumulated during a global livelihood crisis and has been helped by the rise 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 remaining embroiled in a years-long war in Yemen and cracking down on dissent.

“These extraordinary profits and all future earnings from Aramco should not be used to fund, cover up, or attempt to whitewash human rights abuses,” she said.

Loading

Saudi Arabia’s vast oil reserves, located near the surface of its desert expanse, make it one of the world’s least expensive places to produce crude oil. For every $10 increase in oil prices, Saudi Arabia earns an additional $40 billion annually, according to the Institute of International Finance.

Aramco shares were trading at $8.74 on the Tadawul Stock Exchange in Riyadh. That’s down from a high of $11.55 per share last year. However, this current price still gives Aramco a valuation of $1.9 trillion — making it the second most valuable company in the world behind only Apple.

The Saudi government still owns the vast majority of shares in the company. Saudi Aramco already publicly listed part of its value at the end of 2019.

Aramco will release a comprehensive earnings report on Monday.