Saudi Arabia’s state-backed oil giant Aramco announced Sunday that its profits nearly halved in 2020 to $49 billion, a big drop that came as the coronavirus pandemic roiled global energy markets. Saudi Arabian Oil Co. released its annual financial results a year after the pandemic sent the price of oil crashing to all-time lows as people stopped moving around the world to stem the spread of the virus. In recent weeks, however, the price has edged up as movement restrictions ease, commerce increases, and more people get vaccinated against COVID-19. Still, analysts caution that a peak in demand may still be far off.

Despite the 44% drop in net income, Aramco said it would stick to its promise of paying quarterly dividends of $18.75 billion — $75 billion a year — due to commitments the company made to shareholders in the run-up to its initial public offering. Nearly all of the dividend money goes to the Saudi government, which owns more than 98% of the company. Aramco’s policy to pay dividends significantly higher than its 2020 free cash flow of $49 billion stands in sharp contrast to other oil giants that have cut payouts. Seeking a cash infusion to pay the billions of dollars in the face of dwindling revenue, Aramco recently has issued international bonds.

The public figures, obligatory ever since the mostly state-owned company listed a sliver of its worth on Riyadh’s Tadawul stock exchange in 2019, offer valuable insight into the health of the region’s largest economy. Despite Saudi Crown Prince Mohammed bin Salman’s efforts to diversify the economy away from oil, the kingdom remains heavily dependent on oil exports to fuel government spending.

Source Credit: AP News