Saudi Aramco's profits increase because of improved price and refining margins

Saudi Aramco (TADAWUL:2222) reported its largest quarterly profit since coming public in 2019, spurred by higher oil prices and refining profitability.

Aramco joins oil companies such as Exxon Mobil Corp (NYSE:XOM) and BP (NYSE:BP) that have achieved excellent or record-breaking earnings in recent weeks as a result of Western sanctions against major producer Russia causing crude and natural gas prices to rise.

In Aramco's financial report, CEO Amin Nasser noted that the company expects "oil demand will continue to grow for the duration of the decade despite negative economic pressures on short-term global forecasts."

The net profit for the quarter ending June 30 increased by 90% to 181.64 billion riyals ($48.39 billion) from 95.47 billion riyals a year ago, exceeding the average estimate of $46.2 billion by 15 analysts.

In accordance with its own objective, the company issued a second-quarter dividend of $18.8 billion for distribution in the third quarter.

Sunday's largely steady Aramco share price had climbed by more than 25% this year.

Nasser expressed concern to reporters during a quarterly earnings call about the absence of global investment in hydrocarbons, which has led to "very little" spare capacity. Aramco is prepared to expand oil output to its maximum sustained capacity of 12 million barrels per day if requested by the Saudi government.

In the second quarter, Aramco produced an average of 13,6 million equivalent barrels of oil per day. As it pursues energy security and climate goals, Nasser added that the company is attempting to increase output from a variety of energy sources, including renewables and blue hydrogen in addition to oil and gas.

Comparing the same quarter in 2021 to the same quarter in 2022, the quarterly capital expenditures increased by 25% to $9.4 billion. Aramco claimed that it continued to invest in growth through expanding its chemical business and pursuing commercial prospects with low carbon emissions.

In addition, it is evaluating the liquid-to-chemicals industry, with a focus on the Asian market.

In July, Exxon announced its highest quarterly profit ever, with a net income of $17.9 billion, an increase of over fourfold from the same time one year prior. European firms Shell (LON:RDSa) and TotalEnergies also benefited from rising gasoline and diesel production margins.

According to Nasser, the Saudi stock market, which is up 11% this year, is exceptionally favorable for corporate listings in the near future, and there is "some expectation" that Aramco will float some of its subsidiaries.

According to reports, Aramco is aiming to integrate two energy trading businesses by integrating Motiva Trading into Aramco Trading Co in preparation for a prospective initial public offering.