Saudi Aramco's Q2 Profit Dips Amid Production Cuts

Oil giant Saudi Aramco reported a net profit of $29.1 billion for the second quarter, reflecting a slight decline of over 3% compared to the same period last year due to reduced crude production volumes. 

The company's net income for the first half of the financial year totaled $56.3 billion, down from $62 billion in the previous year. Additionally, free cash flow for the second quarter stood at $19 billion, a decrease from $23.2 billion one year earlier. 

Aramco’s stock price rose by 1.31% shortly after the opening of the Tadawul, the Saudi stock exchange. Market analysts had anticipated the company’s revenue to remain relatively flat year-on-year, with production cuts nearly offset by higher Brent prices. The company’s output was 8.99 million barrels per day in the second quarter, as reported by OPEC.

Saudi Arabia's gross domestic product has contracted for four consecutive quarters, largely attributed to ongoing oil production cuts. The country’s oil sector saw an 8.5% decline in the second quarter. OPEC+ recently agreed to extend oil output cuts into 2025 to support prices amidst sluggish demand growth. 

Despite this, Brent Crude prices have fallen from the mid-$80 range to the mid-$70 range, below the $96 per barrel needed for Saudi Arabia to balance its budget, as estimated by the International Monetary Fund. Aramco’s management remains optimistic about future oil demand growth, dismissing concerns over potential economic downturns following weak U.S. job growth data.