Saudi Aramco profits drop 2.3 percent as oil prices stay low

Saudi Aramco reported a 2.3 percent drop in third-quarter profits on Tuesday as global economic uncertainty and a glut in supply continued to weigh on the market, resulting in lower oil prices.

Crude prices have been pinched in recent months by a cloudy outlook for demand owing to global economic headwinds linked to tariffs and recession worries.

The oil alliance OPEC+, which Saudi Arabia is a key part of, has overseen an increase in production in recent months, resulting in more oil flooding the market and eroding prices.

The Saudi oil giant recorded a fall in net income to $26.94 billion (101.02 billion riyals) from $27.56 billion in 2024 -- the 11th consecutive quarterly fall for Aramco.

But stripping out exceptional items, adjusted net income rose about one percent to $27.98 billion.

This figure beat expectations, with projections provided by the company, based on 15 analyst forecasts, predicting a median range of $26.5 billion.

"We increased production with minimal incremental cost, and reliably supplied the oil, gas and associated products our customers depend on," said president and CEO Amin Nasser.

Profits from Aramco, cornerstone of the Saudi economy, are driving the oil-reliant kingdom's ambitious pivot towards business and leisure, which includes building lavish new tourism and entertainment facilities.

The results came after the eight key members of the OPEC+ alliance, including Saudi Arabia and Russia, announced their latest hike in oil production on Sunday.

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have ratcheted up output increases at a pace few saw coming at the beginning of the year.

"The Saudis have been able to boost their production levels and oil prices have edged upward throughout the past quarter," said Robert C. Mogielnicki from Arab Gulf States Institute in Washington.

"But the broader oil price outlook still suggests a strong likelihood of downward pressure on prices as we move into next year."

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The shift to higher production follows a long period in which producers pumped less oil to constrain supply and lift prices.

But faced with growing competition, especially from US shale oil producers, they are now focused on clawing back a larger share of the market.

Other oil majors reported mixed third-quarter earnings results.

British energy giant BP on Tuesday reported a sharp rise in net profit that was fuelled by higher oil output and cost-cutting.

And last week, ExxonMobil saw profits dip 12.3 percent year-on-year, even as the company boasted of increased petroleum volumes.

Crude oil prices have hovered in the $60-$70 per-barrel range in the US and international markets, down about $10 from the 2024 period.

Geopolitical issues, including new US sanctions targeting Russian energy companies last month, have helped keep prices from sliding further.

Back in Saudi Arabia, Aramco's Nasser repeated pledges to deploy "advanced AI solutions" to help spur further growth and increase efficiency.

Last week, Aramco announced plans to acquire a minority stake in Saudi Arabia's new state-backed artificial intelligence firm, Humain.

The Humain investment "is expected to further drive innovation and progress our role in the crucial and rapidly evolving AI sector", Nasser said in Tuesday's statement.

But even as Aramco continues to earn billions every quarter, in September the Saudi government forecast a budget deficit of 5.3 percent of GDP this year, reflecting its breakneck spending.

Among the Saudi "gigaprojects" is NEOM, a futuristic, $500 billion new city which has reportedly run into a number of problems.

"There continues to be a strong link between Aramco's performance and the government's fiscal health," Mogielnicki told AFP.

"A better quarter is nothing to scoff at, but the annual performance is obviously more important," he added.