Saudi Aramco, the state oil company of Saudi Arabia, reported a sharp drop in net profit in the first quarter of this year. The Kingdom’s oil revenues fell by 25 percent compared to the same period last year, Free News reported, citing the company’s reports.
The company’s revenue from January to March was $ 60.151 billion, down 16.2 percent from a year ago, and oil production fell to 9.8 million barrels per day (minus 3 percent).
At the same time, the forecast for capital expenditures for 2020 remains at the level of 25-30 billion dollars, and in annual terms, the profit does not even reach 17 billion dollars.
In the second quarter, against the background of a radical decline in oil prices, and a record reduction in production, the performance of Saudi Aramco will significantly deteriorate.
On May 11, Saudi Arabia announced an additional production limit of one million barrels per day from June, outside of the OPEC+ deal that took effect on May 1.
Currently, the Kingdom produces 8.5 million barrels, according to the quotas it has assumed. In the first summer month, production will be reduced to 7.5 million — which is the maximum level of obligations among all participants in the transaction. Kuwait and the United Arab Emirates (UAE) will join the cuts, but they will collectively remove 180,000 barrels from the market.
Earlier, Saudi Arabia also refused to record discounts on raw materials for European buyers, which were introduced as part of the price war with Russia.
The crisis in the oil market forced the Kingdom to suspend the payment of the subsistence minimum from June 1, and from July 1 to increase the value-added tax by three times, to fifteen percent. The country’s Finance Minister, Mohammed al-Jadaan, explained that such measures had to be taken because of a significant budget deficit in the first quarter, which reached nine billion dollars.