Profits fall sharply at Saudi Aramco, the world’s biggest oil firm

IN DECEMBER, WHEN Saudi Aramco listed 1.5% of its shares on the Riyadh stock exchange, it became the world’s most valuable listed company, with a market capitalisation of $1.9trn or so. The state-backed oil behemoth’s bosses assured investors that low costs and vast reserves would make it resilient in a downturn. Since then Saudi Arabia and Russia waged a short but brutal price war, covid-19 has provoked the most sudden collapse in oil demand on record, and Aramco lost its stockmarket crown to Apple, whose market value has risen by nearly 50% this year to $1.9trn, while Aramco’s has edged down by 6%. Then, on August 9th, the firm reported a 73% year-on-year fall in second-quarter profits.

The events are a Rorschach test both for Aramco’s boosters and its critics. Proponents see a firm that can produce more oil, more profitably than anyone on Earth. Sceptics point to unusual vulnerabilities, notably its majority owner’s dependence on its profits. As with all Rorschach tests, there is no one right assessment.

Start with the optimists. On August 10th Amin Nasser, Aramco’s chief executive, touted its “resilience across oil-price cycles”. Aramco may have endured more of a cyclone than a cycle this year, but Mr Nasser’s claim rings true. His firm has fared well, at least relative to rivals. It still made money, $6.8bn in...



via Business Feeds

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