Oil giant Saudi Aramco sees 2019 profits drop 20%

Oil giant Saudi Aramco said Sunday its profits dropped 20% in 2019 to $88.2 billion, a sharp decline coming as the kingdom stands ready to flood an already-weakened global energy market amid the new coronavirus pandemic.

The announcement by the firm formally known as the Saudi Arabian Oil Co. did not address the kingdom’s plans to crank up production to record levels after a meeting earlier this month between OPEC and Russia failed to see nations agree to a production cut. That led to a 25% plunge in the price of crude, the sharpest decline seen since the 1991 Gulf War, and fears of a price war furthering dragging down the market.

International benchmark Brent crude traded over $33 a barrel Sunday, with analysts worried the price could further drop. While that makes gasoline cheaper for consumers and airlines, it also affects U.S.-based oil companies and others now struggling with lower economic growth amid the virus pandemic.

In its results, Aramco blamed lower crude oil prices and declining margins for its chemical sales for lowering profits.

It also noted the chaos caused by a September attack on the heart of its oil production that temporarily halved production in the kingdom. Saudi Arabia and the West blame Iran for the attack, something Tehran denies though the missiles launched could not reach the targets if fired by the Yemen rebels who initially claimed the assault.

Saudi Aramco reported a profit of $88.2 in 2019, down from $111.1 billion in 2018.

Capital expenditure was down in 2019 to $32.8 billion compared to $35.1 billion the year before. Aramco expects to spend between $25 billion to $30 billion this year, down some $10 billion than previous estimates.