Saudi Aramco loses title of world’s most profitable company to Apple as 2020 profits sink to $49 billion

FILE PHOTO: A view shows branded oil tanks at a Saudi Aramco oil facility in Abqaiq, Saudi Arabia, October 12, 2019. REUTERS/Maxim Shemetov
Branded oil tanks at a Saudi Aramco oil facility in Abqaiq.

  • Saudi Aramco reported a 44% decline in net income for 2020 to $49 billion as the COVID-19 pandemic weighed on results.
  • The world’s largest oil company said it plans to maintain its full-year dividend worth $75 billion.
  • Apple has claimed the title of the world’s most profitable company from Aramco, though that may be short lived.
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Saudi Aramco is no longer the world’s most profitable company after the COVID-19 pandemic wreaked havoc on oil demand in 2020.

Aramco reported its full-year 2020 results on Sunday, showing a 44% collapse in profits to $49 billion. The world’s largest oil company said that despite the results, it plans to pay out its full-year dividend of $75 billion.

“As the enormous impact of COVID-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies,” Aramco CEO Amin Nasser said.

Demand for oil was hit hard in 2020 as rolling lockdowns to combat the pandemic led to reduced travel across the globe. Oil briefly went negative, hitting $-37 per barrel as an imbalance between oil supply and demand led to limited places for storage of the commodity.

Aramco said its results were impacted by both lower crude oil prices and lower volumes sold, as well as weakened margins for its refining and chemicals business.

The results from Aramco mean Apple can now claim the title of the world’s most profitable company, as it reported $59 billion in income for 2020. But that title may be short lived for Apple and could be reclaimed by Aramco, based on a strong rebound in oil prices so far in 2021 and Aramco’s 2019 profit of $88 billion.

Energy represents the best performing sector so far in 2021, as WTI crude oil prices have surged 30% year-to-date.

In the year ahead, Aramco expects to spend $35 billion in capital expenditures, well below its previous guidance for $40 billion to $45 billion in spending.

“Looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track and, as the macro environment improves, we are seeing a pick-up in demand in Asia and also positive signs elsewhere. We remain confident that we will emerge on the other side of this pandemic in a position of strength,” Nasser said.

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Oil prices whipsaw as traders digest attack on Saudi oil terminal

saudi aramco plant
A view shows Saudi Aramco’s Wasit Gas Plant, Saudi Arabia in 2014.

  • Brent oil, the international benchmark, surged above $70 for the first time in more than a year. 
  • Saudi Arabia said it intercepted drone and missile attacks aimed against its facilities. 
  • Yemen’s Houthi rebels reportedly claimed they hit the facilities they targeted in Saudi Arabia.
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Oil prices shot up past $70 for the first time in more than a year after key facilities in Saudi Arabia came under a missile and drone attack Sunday.

Saudi Arabia said the attacks were intercepted, with an attempted drone strike aimed at one of the petroleum tank farms in the Ras Tanura port while a ballistic missile targeted Saudi Aramco facilities in Dharan, according to the Saudi Press Agency

Brent oil, oil’s international benchmark, climbed to an intraday high of $71.38 per barrel as it packed on more than 2% from Friday’s settlement. Brent oil hadn’t traded above $70 since January 2020. The price on Monday eventually turned lower, losing 0.2% at $69.24.

The West Texas Intermediate continuous oil contract reached as high as $67.26 before pulling back. It was off $0.02 at $65.43.

Yemen’s Houthi rebels on Sunday claimed they hit facilities in Ras Tanura, according to the Washington Post. A coalition led by Saudi Arabia has been fighting against the rebels backed by Iran since 2015.

“The Ministry of Defense will undertake all necessary, deterrent measures to safeguard its national assets in a manner that preserves the security of global energy,” said Brigadier General Turki Al-Malki of Saudi Arabia’s defense ministry in a statement.

Oil prices climbed last week after the Organization of the Petroleum Exporting Countries and its allies agreed to keep production cuts intact through April, a decision made as a recovery in the market is still taking shape while the COVID-19 pandemic persists.

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