Oil giant Saudi Aramco's 1st quarter profit down 20% to $31B

Oil giant Saudi Aramco reported a first-quarter profit on Tuesday of $31.88 billion, down nearly 20% from the same period last year as energy prices have sunk over global recession concerns.

The firm known formally as the Saudi Arabian Oil Co. blamed the drop — compared to $39.47 billion in the same quarter last year — on the lower crude oil prices. Aramco made a $30.73 billion profit in the fourth quarter of last year.

"The results reflect Aramco's continued high reliability, focus on cost and our ability to react to market conditions as we generate strong cash flows and further strengthen the balance sheet," Aramco President and CEO Amin H. Nasser said in a statement.

Aramco separately said that it "believes it is well positioned to withstand fluctuating commodity prices through its low-cost upstream production." Benchmark Brent crude traded early on Tuesday around $76 a barrel, down from a high of $125 in the last year.

Saudi Arabia's vast oil resources, located close to the surface of its desert expanse, make it one of the world's least expensive places to produce crude. For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance.

In March, Aramco announced earning $161 billion last year, claiming the highest-ever recorded annual profit by a publicly listed company and drawing immediate criticism from activists amid concerns about climate change.

While saying Aramco was "working to further reduce the carbon footprint of our operations," Nasser remained bullish on the world's need for crude and natural gas.

"We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future," he added.

Those earnings came off the back of energy prices rising after Russia launched its war on Ukraine in February 2022, with sanctions limiting the sale of Moscow's oil and natural gas in Western markets.

However, oil prices have sunk in recent weeks amid fears of a coming recession as central banks in the U.S. and elsewhere raise interest rates to try to tame inflation. That's even after OPEC+, a group of countries including the cartel and those outside it like Russia, announced surprise production cuts in April totaling up to 1.15 million barrels. Recent OPEC+ cuts have seen U.S. President Joe Biden warn of potential "consequences" for Riyadh, even though his national security adviser just visited the kingdom and met with Saudi Crown Prince Mohammed bin Salman.

Aramco stock traded at $9.55 a share on Riyadh's Tadawul stock exchange at close Monday, giving the oil firm a $2.1 trillion valuation and putting it only behind Apple and Microsoft for the highest market capitalization in the world. Just a sliver of its worth, under 2%, is traded on the exchange. The Saudi government holds 90% of the company, with about 8% held by Saudi sovereign wealth funds.

Separately Tuesday, Aramco announced it would begin issuing performance-based dividends to stockholders, on top of the dividends it already offers. Its base dividend in the fourth quarter of last year was $19.5 billion, ranking it as the highest in the world for a publicly traded firm.