Saudi Aramco Profit Jumps 39% on High Oil Prices

The third-quarter profit was lower than what the oil company made in the previous quarter, when it reported its highest quarterly net income since it started trading its shares on the Saudi stock exchange in 2019. Aramco said the decrease in profit was because of lower oil prices compared with the second quarter and a decline in refining and chemicals margins.

“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade,” Aramco Chief Executive Amin Nasser said.

The company is one of the most valuable globally, briefly taking the top spot in May. Its performance has helped boost Saudi economic growth even as the U.S. and Europe worry about recession. The war in Ukraine and the resulting surge in energy prices have boosted petrostates that just a few years ago were struggling with a depressed oil market and a world that was transitioning to cleaner fuels.

The International Monetary Fund expects Saudi Arabia to be one of the world’s fastest-growing economies this year, expanding by 7.6%, the quickest growth in almost a decade.

Saudi Arabia, the world’s largest oil exporter, is using the money to boost its economy and jump-start eye-catching development projects proposed by Crown Prince

Mohammed bin Salman,

who runs the kingdom’s day-to-day affairs for his father,

King Salman.

Though the kingdom is trying to diversify away from oil by creating new industries such as tourism, mining and auto manufacturing, oil remains the engine of the economy.

While oil prices have cooled since a peak in March following Russia’s invasion of Ukraine, they remain high. Brent crude, the global oil benchmark, priced at an average of $70.86 a barrel last year and was at $41.96 a year earlier. It last traded at $94.09 a barrel on Tuesday.

Aramco, majority-owned by the Saudi government, said it would pay its shareholders $18.8 billion as cash dividends for the third quarter. Its free cash flow increased to a record $45 billion for the quarter, up from $28.7 billion in the same quarter last year, it noted. The company’s gearing ratio, a measure of net debt to equity, was negative for the first time since early 2020, indicating how the business environment has improved for the oil giant in recent years.

Last month, Saudi Arabia orchestrated a 2 million barrels-a-day production cut by the 23-member oil-producer coalition known as OPEC+, despite efforts from the U.S. and a few other producers to lobby for an increase in output to offset high fuel prices and inflation.

Saudi officials argued privately that the OPEC+ production cut was necessary to protect their economy. By early October, oil prices had fallen over 30% from a peak in June, and were threatening to fall below $80 a barrel. Saudi Arabia is likely to need $76-$78 a barrel to balance its budget next year, economists say, based on preliminary forecasts.

Saudi officials told their American counterparts that they believed the oil market could collapse if they didn’t act, and fall to $50 a barrel—a move they feared would imperil the kingdom’s Vision 2030 economic plan to diversify its economy, said people familiar with the matter.

Saudi Arabia and other Gulf states have also used their windfall oil income to help crisis-racked neighbors such as Egypt, Pakistan and Turkey, doubling down on a diplomatic tool they have long used to build their geopolitical power.

—Rory Jones contributed to this article.

Write to Summer Said at [email protected] and Nikhil Lohade at [email protected]

The third-quarter profit was lower than what the oil company made in the previous quarter, when it reported its highest quarterly net income since it started trading its shares on the Saudi stock exchange in 2019. Aramco said the decrease in profit was because of lower oil prices compared with the second quarter and a decline in refining and chemicals margins.

“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade,” Aramco Chief Executive Amin Nasser said.

The company is one of the most valuable globally, briefly taking the top spot in May. Its performance has helped boost Saudi economic growth even as the U.S. and Europe worry about recession. The war in Ukraine and the resulting surge in energy prices have boosted petrostates that just a few years ago were struggling with a depressed oil market and a world that was transitioning to cleaner fuels.

The International Monetary Fund expects Saudi Arabia to be one of the world’s fastest-growing economies this year, expanding by 7.6%, the quickest growth in almost a decade.

Saudi Arabia, the world’s largest oil exporter, is using the money to boost its economy and jump-start eye-catching development projects proposed by Crown Prince

Mohammed bin Salman,

who runs the kingdom’s day-to-day affairs for his father,

King Salman.

Though the kingdom is trying to diversify away from oil by creating new industries such as tourism, mining and auto manufacturing, oil remains the engine of the economy.

While oil prices have cooled since a peak in March following Russia’s invasion of Ukraine, they remain high. Brent crude, the global oil benchmark, priced at an average of $70.86 a barrel last year and was at $41.96 a year earlier. It last traded at $94.09 a barrel on Tuesday.

Aramco, majority-owned by the Saudi government, said it would pay its shareholders $18.8 billion as cash dividends for the third quarter. Its free cash flow increased to a record $45 billion for the quarter, up from $28.7 billion in the same quarter last year, it noted. The company’s gearing ratio, a measure of net debt to equity, was negative for the first time since early 2020, indicating how the business environment has improved for the oil giant in recent years.

Last month, Saudi Arabia orchestrated a 2 million barrels-a-day production cut by the 23-member oil-producer coalition known as OPEC+, despite efforts from the U.S. and a few other producers to lobby for an increase in output to offset high fuel prices and inflation.

Saudi officials argued privately that the OPEC+ production cut was necessary to protect their economy. By early October, oil prices had fallen over 30% from a peak in June, and were threatening to fall below $80 a barrel. Saudi Arabia is likely to need $76-$78 a barrel to balance its budget next year, economists say, based on preliminary forecasts.

Saudi officials told their American counterparts that they believed the oil market could collapse if they didn’t act, and fall to $50 a barrel—a move they feared would imperil the kingdom’s Vision 2030 economic plan to diversify its economy, said people familiar with the matter.

Saudi Arabia and other Gulf states have also used their windfall oil income to help crisis-racked neighbors such as Egypt, Pakistan and Turkey, doubling down on a diplomatic tool they have long used to build their geopolitical power.

—Rory Jones contributed to this article.

Write to Summer Said at [email protected] and Nikhil Lohade at [email protected]