High oil prices are profitable for Saudi Aramco—and even more so for the Saudi government.
The conflicting incentives that kept most international shareholders away from the 2019 initial public offering of Saudi Arabian Oil Co. were on full display in Sunday’s strong financial results. Minority shareholders are right to worry that their interests come second to those of the majority-holding state.
Global oil prices at around $100 a barrel helped Aramco generate $39.5 billion profit and a 27.2% return on average capital employed in the first quarter. Like its international rivals, it paid dividends, chipped away at debt and offered shareholders a little bonus. Unlike peers, it will significantly increase capital spending—from $31.9 billion last year to between $40 billion and $50 billion this year.
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