World’s largest oil exporter, Saudi Aramco, has beaten analyst expectations to post a $31.88 billion (119.54 billion riyals) net profit for the first quarter of 2023. The figures, which were posted on Tuesday, May 9, by the company, showed a fall of about 19% from the corresponding period in 2022.
According to Saudi Aramco, the drop was mainly driven by lower crude prices, although they were partially offset by lower taxes as well as a rise in finance and other income.
However, Aramco’s figures beat analysts’ expectations for the quarter. Market analysts had expected to see a dip in Aramco’s net profit in Q1 2023 when compared to 2022 due to inflation and rising interest rates, as well as recession fears. Analysts at Reuters had placed the company’s earnings for the quarter at $30.5 billion.
Commenting on the results, Aramco President and Chief Executive Officer Amin H. Nasser said:
After the OPEC surprise production cuts on April 2, 2023, oil prices rallied until the middle of April, when prices fell back to $70 per barrel. According to Bloomberg, speculators are fleeing the oil market, which will result in extreme price swings.
Bloomberg blames the current realities on the surprise production cuts by OPEC and its allies, which have sent prices surging, leaving many investors wrong-footed.
So, instead of buying back into the market with long holdings or new short bets, the money managers have decided to stay on the sidelines.
Saudi Aramco has also said it has the intention to introduce a mechanism for performance-linked dividends in addition to the base dividend. Its base dividend in the fourth quarter of last year was $19.5 billion.
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