Saudi Aramco’s profit rose by 30% indicating oil market recovery

In the first-quarter, Saudi Aramco—the oil giant of Saudi Arabia—posted 30 per cent increase in net income indicating recovery in oil market.

The net income of the company increased to $21.7 billion in the quarter as compared to $16.6 billion in the same period last year.

Aramco succeeded in beating analysts’ expectation of $17.24 billion and its net income approached close to 2019’s first-quarter income of $22.2 billion.

The free cash flow of the company was $18.3 billion for the first quarter, an increase from last year at $15 billion.

CNBC reported that Ellen Wald, president of Transversal Consulting and author of the book “Saudi, Inc.” said that Aramco was forced to drastically cut its capital expenditure last year as the coronavirus pandemic hammered oil prices, and it “continues to explore plans to sell vital assets to raise funds”.

“It cannot be ignored that the massive dividend commitment and the need to fund the Saudi government budget are weights on the company. That doesn’t mean Aramco isn’t well positioned, but no other major oil company has to deal with these burdens,” Wald told CNBC.

The quarterly profits earned by the company reflect recovery of oil market, especially since last year when Aramco reported 25 per cent decrease in net income due to coronavirus pandemic.

President and CEO of Aramco, Amin Nasser said in a company release, “The momentum provided by the global economic recovery has strengthened energy markets.”

“Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming,” adding that “some headwinds still remain”.

Earlier this month, it was reported that Aramco is in talks with an unnamed global energy company to sell 1 per cent stake of the company.

The Crown Prince of Saudi Arabia and chairman of Aramco, Mohammed bin Salman in a television interview said that an announcement would be made in a year or two.

(With inputs from CNBC)

Picture Credits: WSJ