Lower Crude Prices and Light Demand Drop Saudi Aramco 1Q Profit by 25% to $16.6Bn

Saudi Aramco, a Saudi Arabian multinational petroleum and natural gas company, reported a 25% decline in net profit for the first quarter of 2020 as the company is facing low crude prices and light demand from customers.

 

On Tuesday, Aramco reported a net profit of 62.5 billion riyals ($16.6 billion) in 1Q20, dropped 83.3 billion riyals YoY. The company stated that the decline was mainly due to the lower crude oil prices, a decline in refining and chemicals margins and inventory re-measurement losses.

“The Covid-19 crisis is unlike anything the world has experienced in recent history and we are adapting to a highly complex and rapidly changing business environment,” Aramco President and CEO Amin Nasser said in the release. “Aramco has demonstrated resilience during economic cycles and has an unparalleled position due to a strong balance sheet and low-cost structure.”

The announcement of Aramco’s earnings came after the company had just announced an additional cut in its oil output by 1 million barrels per day to stabilize the oil market. With this additional cut, the Kingdom will produce 7.5 million bpd in June, down from the almost 12 million bpd production capacity of Saudi Arabia.

“The Kingdom aims through this additional cut to encourage OPEC+ participants, as well as other producing countries, to comply with the production cuts they have committed to, and to provide additional voluntary cuts, in an effort to support the stability of global oil markets,” a statement from the Saudi press agency said.