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Saudi Aramco Q3 Profit Slips 23% As Oil Prices And Production Fall

Saudi Aramco reported on Tuesday a 23.2% annual decline in its third-quarter net income as lower oil prices and lower oil sales weighed on profits and cash flows.

Aramco booked a net income of $32.6 billion for the third quarter of 2023, down from a net income of $42.4 billion for the same period of 2022, the world’s largest oil firm by market capitalization and production said today. 

“The decrease principally reflects the impact of lower crude oil prices and volumes sold,” Saudi Aramco said in a statement.  

The Saudi state oil giant, the world’s top crude oil exporter, reduced its crude oil production and exports in the third quarter as Saudi Arabia began in July an extra voluntary output cut of 1 million barrels per day (bpd) to help “stabilize the oil market.”

This weekend, the Saudis reiterated the commitment to proceed with the extra cut until the end of this year.

Since July, Saudi Arabia has been producing around 9 million barrels daily, effecting a voluntary reduction of some 1 million bpd, and crude oil exports have slumped to more than two-year lows. 

Due to the lower production and export levels, and to lower crude oil prices between July and September compared to the same period of 2022, Aramco’s free cash flow dropped to $20.3 billion for Q3 2023 from $45.0 billion for the same quarter last year.

Despite the lower income compared to last year’s records, Aramco intends to continue distributing $19.5 billion base dividend for the quarter, to be paid in the fourth quarter. The Saudi oil giant, which announced in August its intention to distribute performance-linked dividends over six quarters beginning in Q3 2023, paid the first such dividend of $9.9 billion in the third quarter. The second distribution of another $9.9 billion will be paid in the fourth quarter based on combined full-year 2022 and nine-month 2023 results.

“We intend to continue investing across the hydrocarbon chain, leveraging cutting-edge technologies to optimize our operations and advance the development of emerging energy solutions,” Saudi Aramco’s president and CEO Amin Nasser said. 

“It is an approach rooted in our belief that a balanced and realistic energy transition plan should consider the needs of all geographies, in order to avoid disparities between global energy consumers.”

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By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on November 07 2023 said:
    This is the situation with all major oil exporters but more so for Saudi Arabia because of its so-called voluntary production cut which I attribute to production difficulties.

    No one let alone Saudi Arabia would sacrifice revenues at prices higher than its fiscal breakeven price of $83-$85 a barrel unless it is facing production levels.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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