Aramco is relying on the possibility of an Asian-led rebound in energy demand in 2021. The Saudi Arabian state oil giant expects the rebound could save the high jump in its 2020’s net profit.
Signs of demand recovery seen, Aramco hopes for a rebound in profit
The COVID-19 pandemic greatly affected companies in the oil industry, including Aramco. Oil prices, though, have consequently rallied this year. Economic recovery and extended output cuts from oil producers are some of the contributors to it.
Amin Nasser, the CEO of Aramco told an earnings call that “We are pleased that there are signs of a recovery”. “China is also very close to pre-pandemic levels. So in Asia, East Asia in particular, there is strong pickup in demand,” Nasser continued.
Nasser also mentioned the possibility of higher demand in Europe and the United States after vaccination. Quoted from Reuters, Nasser mentioned its expectation of an increase in global oil demand up to 99 million barrels per day by 2021.
Monica Malik, a chief economist at Abu Dhabi Commercial Bank, mentioned that Aramco might be bearing the bring of the crisis more than the treasury. Aramco had to pay steady dividends to the state despite low oil prices.
As the world’s largest oil exporter, Aramco revealed to have lost 44.4% of its net profit to 183.76 billion riyals ($49 billion) for the year ended Dec. 31. In comparison, the Saudi Arabian company noted 330.69 billion from a year earlier.
Aramco spoils on future plan
While the future of the oil industry is still unclear, Aramco will focus on the present. Nasser said, “looking ahead, our long-term strategy to optimize our oil and gas portfolio is on track”.
Accordingly, Aramco has lowered its guidance for capital expenditure in 2021. The company cut it down from a range of $40 billion to $45 billion to around $35 billion. Additionally, Aramco recorded around $27 billion in capital spending in 2020.
Read also: OPEC Maintains Production Cuts, Oil Price Swells
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