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Middle Eastern oil giant Saudi Aramco projects oil demand to further rise following a commendable Q3 2022 report.
Saudi Aramco recently reported its Q3 2022 financial statement, which shows a 39% year-over-year (YoY) surge in profit due to higher energy prices. According to the state-owned Saudi Arabian oil company, net income for the third quarter came in at $42.4 billion compared to $30.4 billion the previous year. Furthermore, Saudi Aramco’s latest revenue haul came in just above expectations of $41.7 billion by 16 analysts.
For its Q3 2022 outing, Saudi Aramco reported cash flow from operating activities at $54 billion. Furthermore, the Dhahran-based company also reported a record $45 billion in free cash flow from $28.7 billion in the year-ago quarter. The Saudi oil giant stated that it has paid out its second-quarter dividend of $18.8 billion. Furthermore, its slated Q3 dispensation of the same amount will be paid out in the fourth quarter.
CEO Weighs In on Saudi Aramco Q3 2022 Outing
Speaking on Saudi Aramco’s commendable quarter, which also comes amid tightening global supply, CEO and President Amin Nasser explained:
“While global crude oil prices during this period were affected by continued economic uncertainty, our long-term view is that oil demand will continue to grow for the rest of the decade given the world’s need for more affordable and reliable energy.”
In addition, Nasser also touched on the company’s earnings and cash flow numbers, saying they “reinforce our proven ability to generate significant value through our low cost, low-carbon intensity upstream production and strategically integrated upstream and downstream business.”
Yousef Husseini, associate director for equity research at EFG Hermes, opines that the sustained oil demand boon will further propel Saudi Aramco. According to him, this lengthy period of elevated crude prices feeds into solid cash flow performances and deleverages the company’s balance sheet. In addition, these optics could also translate into an ultimate increase in dividends to shareholders.
Also sharing Saudi Aramco’s optimism in increasing global demand for oil products is the Organization of Petroleum Exporting Countries (OPEC). On Monday, the oil-producing intergovernmental organization hiked its medium and long-term forecasts for crude demand. In addition, OPEC also stated that such forecasts require around $12.1 trillion in investments.
However, OPEC’s positive outlook seems to be contrary to that of other organizations in its industry, such as the International Energy Agency (IEA). For instance, although the Paris-based autonomous intergovernmental organization also envisions oil demand going up, it predicts it will reach its peak within the next five years. Reasons that may have influenced the IEA’s forecast is the attempted shift by a growing number of countries from fossil fuels to renewable energy.
Saudi Aramco joins a list of other oil-producing mainstays to benefit from surging crude and natural gas prices. They include Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), as well as BP (LON: BP). However, the development of these companies cashing out more from the oil industry has triggered fresh calls to tax the sector further.