Profit tumbled at Saudi Aramco, the world’s biggest oil company

Saudi Aramco had a rough 2020, just like every other oil company. But Aramco isn’t any ordinary oil company — it’s the world’s biggest, and the pandemic’s toll on its business had a decidedly adverse effect on the Saudi-owned business.

The company announced Sunday that its net profit fell a whopping 44.4% to $49 billion in 2020. Dealt that significant blow, Saudi Aramco committed to spend less this year than it had anticipated: Aramco said it planned to spend about $35 billion in 2021 on capital expenditures, down sharply from its previous estimate of $40 billion to $45 billion.

Nonetheless, the oil company was upbeat about the future: It maintained its $75 billion dividend for the year and the company thinks it will return to pre-pandemic oil production levels by the end of 2021.

Saudi Aramco president and CEO Amin Nasser said on a call with reporters he is very optimistic about 2021, and he expects the company to reach close to 99 million barrels per day by the end of the year. He said this outlook is based on the views of different global entities and agencies, and he predicted demand will increase in 2022.

“Vaccine deployment will make the situation much better,” he added.

The profit drop reflects the coronavirus pandemic’s effect on global energy markets. Last spring, the coronavirus pandemic sent demand for travel plummeting, causing oil usage to drop rapidly. At the same time, Saudi Arabia ramped up production as part of a price war against Russia. That led to a major oil glut, and the world ran out of room to store barrels.

Since the historic oil price decline that led price into negative territory, oil has roared back after OPEC and Russia agreed to roll over production cuts. In February, oil breached $60 per barrel, the highest level since January 2020.

“As the enormous impact of Covid-19 was felt throughout the global economy, we intensified our strong emphasis on capital and operational efficiencies,” Nasser said.

The earnings report comes at a time when Saudi Aramco refineries have been facing drone attacks from Yemen’s Iran-backed Houthi rebels.

“Our reliability in 2020 despite Covid-19 and these attacks on different parts of our facilities in the north and the south and in Ras Tanura lately is 99.9%,” Nasser said. “It’s even higher than previous years.”

It’s further demonstration about the robust crisis management and continuity plans that we have.”

— CNN’s John Defterios contributed to this report.