The logo of Saudi Aramco is seen at Abqaiq oil facility, Saudi Arabia, October 12, 2019. Maxim Shemetov | Reuters
DUBAI, United Arab Emirates Saudi Arabia’s oil giant Aramco saw a 158% rise in its third quarter net income, to $30.4 billion. This is as Aramco, one of the largest oil companies worldwide, continues to reap the benefits of the global economic reopening and rising oil and gas prices. Analysts expected a median income of $29.1 trillion for the quarter. However, this result was better than anticipated. Aramco reported net income in the third quarter 2020 of $11.8 billion. Amin Nasser, President and CEO of Aramco, stated that the company's third quarter performance was due to increased economic activity in key market areas and an increase in energy demand. Nasser said that although there are still headwinds for the global economy due to supply chain bottlenecks and some other factors, we believe that energy demand will continue to be healthy in the future. Aramco stated that the company's increase in net income resulted from higher crude oil prices, volumes sold and stronger chemicals margins in the quarter. This is due to the company benefiting from rebounding global energy demand as well as increased economic activity in key market markets.
Market boom
WTI crude oil prices have soared to above $85 over the past weeks. This is a record high since 2014. It's a sign that demand recovery has become more important than supply scarcity. The fourth quarter results will reveal the extent of the global energy crisis. Natural gas prices have risen by around 130%. Aramco announced a $18.8billion dividend to be paid during the fourth quarter. This payout is covered by an increase in free cash flow to $28.7billion in the third quarter. This compares with $12.4 billion for 2020. Due to stronger cash flows and higher oil prices, gearing, which is a measure of the company’s debt position, rose to 17.2% from 23%. Aramco said that it will "invest for the future", with capital expenditures of $7.6 Billion in the third quarter. This represents a 19% increase compared to the same period in 2020. Aramco predicted that 2021 capital spending would be around $35 billion. These results are a confirmation of a record quarter for "Big Oil," which is a term that used to describe the largest oil and gas companies in the world. Profits at Chevron and ExxonMobil, both U.S. oil companies, rose to multi-year highs during the quarter. Royal Dutch Shell posted record cash flow and TotalEnergies saw a sharp increase in performance.
Profit and Pressure
