Saudi Aramco witnessed its net profit tumble by almost 40% in the second quarter, pulling in $30.0 billion. Though this descent was largely due to sinking crude oil prices and diminishing refining margins, the results still edged past analyst predictions by a smidge. In an attempt to offer reassurance amidst economic challenges, Aramco’s CEO Amin Nasser highlighted signals of persistent global demand, particularly noting the aviation sector’s resurgence. The broader oil industry is no stranger to recent fiscal stumbles, with bigwigs like BP (BP), Exxon Mobil (XOM), and Shell (SHEL) also reporting dwindling earnings, reflecting the softer oil prices in the market.
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Additionally, Aramco’s production saw a decline, further impacted by Saudi Arabia’s announcement of a 1 million barrel per day production cut, which might extend even further. These cuts, along with similar measures by OPEC members, are straining the supply, driving prices up—a move seen by experts as OPEC+’s strategy to stabilize the market. This upward trajectory in oil prices is expected to persist, with analysts from Goldman Sachs projecting Brent prices might soar to $93 per barrel by next year.
Overall, the broader energy market, measured by the Energy Select Sector SPDR Fund (XLE), has been rallying since June. As a result, XLE is up almost 5% on a year-to-date basis.
