Is Aramco affected by the sharp decline in global financial markets because of Corona?

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Saudi Aramco is set to unveil its annual profits for the first time next week, in the midst of a global economic turmoil driven by measures linked to the emerging Corona virus.

The announcement comes after the energy giant collected a record amount of more than $ 25 billion due to the sale of 1.75 percent of its shares in an initial public offering in the local market last November.

The financial results for 2019 of the world’s largest energy company will not be affected by the emerging Corona virus or by the dissolution of the OPEC Plus coalition that caused the collapse of oil prices, as these developments took place this year.

In April 2019, Aramco opened its books of rating agencies for the first time, showing that it made a net profit of $ 111.1 billion for the year 2018, making it the most profitable company in the world.

Aramco will disclose on Monday its annual results for 2019 for the first time directly to investors and the public, with strong indications that profits will decline.

The company’s net profit fell for the first nine months of last year by 18 percent from $ 83.3 billion to $ 68.2 billion, and its revenue decreased due to lower oil prices.

With the virus causing major damage to the global economy and oil prices, the world’s most capitalized company is preparing to raise its crude supplies from April as part of a raging price war against Russia.

It also announced plans to raise production capacity by one million barrels per day to 13 million, a project that requires investments in billions of dollars.

Aramco shares rose immediately after listing on the local “Tadawul” market on December 11, as they gained 19 percent to reach the share value to 38 riyals ($ 10.1), raising the company’s market value above the $ 2 trillion threshold sought by me Prince Muhammad bin Salman.

– virus and disagreements –

But in light of the virus’s damage, and oil prices plunged by more than 50 percent due to disputes within the OPEC Plus alliance, Aramco’s shares fell 29 percent from their highest point, dropping this week to below the listing price.

The company’s market value also fell by $ 600 billion to only $ 1.44 trillion.

And Thursday, Aramco’s market value was about $ 1.55 trillion, but it is still the largest listed company in the world.

And before the IPO, Aramco promised that it would distribute profits of at least $ 75 billion annually until 2024 as a way to attract investors.

However, the economic impact of the virus and the failure of producers to reach an agreement to cut production do not help this easily, as they are pushing for an additional drop in oil prices, which currently reached $ 34 a barrel from about $ 65 during the IPO phase.

The outlook for future crude and demand prices is also very bleak.

In its latest monthly report, the Organization of the Petroleum Exporting Countries (OPEC) reduced its forecasts for average global daily demand by 0.92 million barrels, to 99.73 million barrels.

This indicates that the average daily global demand continues to rise by 60 thousand barrels per day, but “OPEC” said that “given the recent developments, the risk of decline currently exceeds any positive indicators.”

“(The risks) point to more potential reviews of oil demand growth if the current situation continues,” she added.





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