Oil giant Saudi Aramco has revealed its profits skyrocketed by more than 80% in the first three months of the year, with prices buoyed by post-pandemic global demand and the Ukraine war.
The bumper first-quarter earnings by the state-owned firm, which overtook Apple as the world’s most valuable company last week, showed a record net income of $39.5bn (£32.2bn), up from $21.7bn (£17.7bn) during the same period last year.
This was broadly in line with analyst forecasts.
The figure marks the oil group’s highest quarterly profit since 2019, when the Saudi government, which owns 98% of the company, sold a 1.7% stake mainly to the Saudi public and regional institutions.
Earnings by global energy companies, such as BP and Shell, have risen to their highest in at least a decade on the back of rising commodity prices, even as many of them reduced the value of assets as a result of exiting Russia.
The hefty revenues have seen mounting calls in the UK for a windfall tax on oil and gas firms to help households cope with the cost of living crisis, which has been driven by soaring energy prices.
In a statement, Aramco’s chief executive attributed the spike in profits to rising prices as well as increased production.
President and chief executive Amin H Nasser said: “Against the backdrop of increased volatility in global markets, we remain focused on helping meet the world’s demand for energy that is reliable, affordable and increasingly sustainable.”
Oil prices rallied to a 14-year high of $139 (£113) a barrel in March immediately after the Kremlin’s invasion of Ukraine, although this later fell back as Russian oil continued to flow and renewed lockdowns curbed demand in China, a top importer.
Brent crude prices ended the first quarter up almost 70% to $107.91 (£88) a barrel from the end of March 2021.
Shares of Aramco jumped 1.85% on Sunday on the earnings report.
Stocks have shot up since the start of the year, making it the world’s most valuable company last week with a market cap of around $2.43trn (£2trn).
The oil group said it maintained its $18.8bn (£15.3bn) cash dividend for the fourth quarter of last year – rounding off one of the biggest full-year cash dividends in the world.
The strong quarterly results come after the reopening of economies and the relaxation of global coronavirus restrictions had already delivered record annual results for the firm last year.
Soaring oil prices have provided a major boost to the Saudi economy, which reported its fastest economic growth in a decade during the first quarter of the year.
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Should oil companies pay a windfall tax?
It comes amid growing demands in Britain for a one-off levy on energy firms to assist struggling families.
Labour frontbencher Ed Miliband told Sky News that the chancellor would eventually give in to pressure and impose a windfall tax as it was “an unanswerable case”.
While Chancellor Rishi Sunak and Prime Minister Boris Johnson have so far resisted calls for such a move, they have not ruled it out.
Speaking to Sky’s Sophy Ridge On Sunday, Mr Miliband, the shadow secretary of state for climate change and net-zero, said: “Of course the right thing to do is to levy a windfall tax on those oil and gas companies so we can provide proper help to families.”
He added: “I think it is frankly obscene that the government is refusing to do this.
“My message to the chancellor is this: ‘You’re going to do a windfall tax’. I believe he is going to do a windfall tax because, frankly, it’s an unanswerable case.”
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Windfall tax ‘is the right thing to do’
Meanwhile, Frances O’Grady, head of the Trades Union Congress, told Ridge: “All the evidence is that prices have been driven by increases in energy prices, certainly not wages, which are set to fall in real terms.
“What we need is for the chancellor, who I’m afraid woefully failed working families, to come back with that windfall tax on energy companies that would provide some immediate relief.”
However, Business Secretary Kwasi Kwarteng said he maintained his opposition to such a levy.
He added: “I’ve always argued against it publicly and privately, but as every chancellor I can remember has said, four months before the budget, no option is off the table.
“It is entirely reasonable.”