Thanks to rising crude oil prices, Saudi Arabia records quarterly fiscal surplus after over 2 years

Aramco Q3 Net Profit Nearly Triples

[Photo by Reuters-Yonhap News]

[Asia Economy Reporter Park Byung-hee] Thanks to the rise in international crude oil prices, Saudi Arabia has achieved its first quarterly fiscal surplus in over two years.

Bloomberg News reported on the 31st of last month (local time), citing the Saudi government announcement, that Saudi Arabia recorded a fiscal surplus of approximately 6.7 billion riyals (about 2.101 trillion KRW) in the third quarter. The annual fiscal deficit decreased to 5.4 billion riyals.

Fiscal revenue from the oil sector surged 60% year-on-year to 148 billion riyals. Meanwhile, fiscal revenue from the non-oil sector fell 22% year-on-year to 95 billion riyals.

A Saudi government official stated that thanks to rising oil prices and increased production, the fiscal deficit ratio relative to next year's gross domestic product (GDP) is expected to decrease to 1.6%. After the COVID-19 pandemic, as fiscal revenues declined, the Saudi government took measures such as cutting public servant wages and raising value-added tax, which sparked public outrage.

Saudi state-owned oil company Aramco also announced on the same day that its third-quarter net profit nearly tripled compared to the same period last year.

Aramco's third-quarter net profit was recorded at $30.4 billion. The net profit for the third quarter of last year was $11.8 billion. CNBC reported that Aramco's third-quarter net profit exceeded market expectations of $29.1 billion.

Aramco President and CEO Amin Nasser explained, "The third-quarter results are the outcome of the resumption of economic activities in key markets and increased energy demand." He added, "Although factors threatening the global economy, such as supply chain disruptions, remain, we are optimistic about energy demand in the short term."

Aramco stated that its third-quarter capital expenditure amounted to $7.6 billion, a 19% increase compared to the third quarter of last year. It added that the annual capital expenditure for this year is expected to be $35 billion.

Aramco plans to pursue fossil fuel and green investments concurrently for the time being. While aiming for carbon neutrality by 2050, it plans to increase crude oil production to about 13 million barrels per day by 2037.

Aramco Chairman Yasir Al-Rumayyan emphasized that climate change is the greatest challenge currently faced, but the recent global energy crisis has shown the need for a stable energy transition. He added that energy transition is a long-term and complex task, and oil and gas will continue to play an important role.

The Saudi government aims to achieve carbon neutrality by 2060, ten years later than Aramco. To this end, it plans to invest approximately $190 billion.

This content was produced with the assistance of AI translation services.