Saudi Arabia's state-run oil giant, Aramco, announced a significant drop in profits for the second quarter of this year. The company reported a profit of $30 billion, representing a nearly 40% decline compared to the same period in the previous year. This decrease was mainly attributed to lower oil prices and weakening refining and chemicals margins. Total sales amounted to just over 400 billion riyals (approximately $106 billion), down from 562 billion riyals ($150 billion) in the second quarter of 2022.

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Despite the profit decline, Aramco increased its dividend payout to investors, reaching 110.18 billion riyals ($29.38 billion) compared to $18.8 billion in the second quarter of 2022. The dividend is partly based on the company's record earnings from the previous year.

Aramco's CEO, Amin Nasser, emphasized the company's resilience and adaptability in the face of market fluctuations. Fortune magazine recently ranked Aramco as the second-largest company in the world by revenue, trailing behind Walmart and surpassing Amazon and Apple.

However, Aramco's substantial earnings have come under scrutiny, especially with the upcoming UN climate talks hosted by the United Arab Emirates, aiming to reduce global reliance on fossil fuels and curb emissions. The company benefited from a spike in oil prices last year due to geopolitical tensions, but Saudi Arabia has since cut oil production to boost prices amid weaker demand from China and rising interest rates.

The kingdom's economic transformation plan, Vision 2030, relies heavily on high oil prices. The plan includes ambitious projects, such as a futuristic $500 billion city on the Red Sea coast and significant investments in tourism, entertainment, and sports. Some critics accuse the country of using sports investments to distract from its human rights record, including its involvement in Yemen's war and the killing of journalist Jamal Khashoggi.

The International Monetary Fund estimates that Saudi Arabia needs an oil price of around $80 a barrel to avoid running a deficit. Currently, benchmark US crude oil is trading around $82.82 per barrel for September delivery, while Brent crude for October delivery is at $86.24 a barrel.

Aramco's 2019 initial public offering raised a record $29.4 billion when it sold a small portion (less than 2%) of the company to investors. In recent years, Crown Prince Mohammed bin Salman has transferred 8% of Aramco to the kingdom's $700 billion sovereign wealth fund to support funding for massive infrastructure projects associated with Vision 2030.

With Input from AP