Saudi Oil Giant Reports Large Increase in Profits

Riyadh-based Aramco reaps the rewards of increased energy demand. (Wikimedia)

Saudi Arabia’s state-owned oil company Aramco announced on October 31 that its net profits more than doubled in the past year due to increased economic activity and energy demand around the world, per Al-Jazeera. Aramco’s net income increased to $30.4 billion, a massive jump from last year’s $11.8 billion, beating analysts’ expectations, says Al Jazeera. According to Reuters, Aramco’s CEO Amin Nasser described the company’s resurgent growth as “exceptional,” especially in light of Aramco’s struggles during the COVID-19 pandemic, when lockdowns across the globe stifled travel and energy demand.

According to the Associated Press (AP), as travel restrictions continue to loosen globally, more consumers and companies have begun using gasoline and airplane fuel. The resulting increase in energy consumption is pushing oil prices higher and leading to higher profits for oil companies across the industry, reports AP. 

The resurgent energy demand also pushed Aramco’s valuation above $2 trillion in early October, making it one of the most valuable companies in the world just behind Microsoft and Apple. While the vast majority of Aramco is owned by the Saudi government, a small percentage is traded on the stock market. As a result, Aramco is a key component of Saudi Arabia’s wealth and an important symbol of Saudi dominance in the oil industry.

Aramco’s announcement came several weeks after Saudi Crown Prince Mohammed bin Salman announced at the Saudi Green Initiative Forum that his country would aim to reach net-zero greenhouse gas emissions by 2060, reports Al-Jazeera.

The crown prince delivered this news ahead of the COP26 climate change conference in Glasgow, Scotland. He also introduced a new fund that will invest in new technologies that will combat greenhouse gas emissions, such as carbon-capture techniques, according to Al-Jazeera. Projections estimate that Saudi investments in carbon-neutral technology will exceed $187 billion by 2030, reports Al-Jazeera, representing an important shift in the rhetoric of the world’s largest oil exporter.

However, skepticism about the dissonance between Saudi Arabia’s rhetoric and its fossil fuel-dependent economy abounds, says Al-Jazeera While the kingdom pledged to commit to a carbon-neutral future, questions remain about whether Saudi Arabia can move past extracting and selling its vast oil reserves, actions that continue to contribute to climate change, per Al Jazeera. Given that the Saudi economy is heavily dependent on oil revenues for government spending, Aramco’s financial health is crucial for the kingdom’s stability.