Saudi Arabia’s state-owned oil company, Aramco, will continue investing in China despite a 38 percent profit decline due to lower oil prices and production cuts. In Q2, net profit dropped to around $30.08 billion, down from $48.44 billion in the same period last year.
Russia’s invasion of Ukraine boosted crude prices, benefiting Saudi Arabia’s revenue. Despite being the G20’s fastest-growing economy in the previous year, Aramco briefly surpassed Apple as the world’s most valuable public company.
However, falling crude prices and unilateral production cuts have cooled the kingdom’s economy. The IMF downgraded Saudi Arabia’s growth forecast from 3.2 percent to 1.9 percent in July.
Brent has fallen about 25 percent from a year ago, and Saudi Arabia’s oil exports are down 40 percent.
Despite the profit decrease, Aramco CEO Amin Nasser expressed commitment to expanding their presence in China, where Saudi Arabia competes with Russia.
Saudi Arabia has heavily invested in Chinese refineries and recently acquired a 10 percent stake in China’s Rongsheng Petrochemical for about $3.6 billion. This move will provide additional crude oil to Rongsheng-affiliated refineries.
Saudi Arabia and Russia are both striving to become China’s primary oil supplier. Amid rising oil prices and efforts to limit crude supplies, Saudi Arabia has played a significant role in the OPEC+ alliance.
As Saudi Arabia’s market share in Asia declines compared to Russia, which has become India’s primary oil supplier, competition for China’s market share intensifies. Russia turned to China as a customer after Europe rejected its oil post-Ukraine invasion.
With limited growth potential in Europe due to climate goals, Asia has become a crucial battleground for oil sales.