Saudi Aramco to cut spending amid coronavirus outbreak and profit fall

Saudi Aramco will cut capital spending in 2020 in light of the coronavirus (COVID-19) outbreak and it reported a 21% decline in net profit last year.

The state-run oil giant said it expects capital spending to be between US$25-30 billion this year, compared to $32.8 billion in 2019, with the reduction based on current market conditions and recent commodity price volatility.

CEO Amin Nasser said Aramco has already taken steps to ‘rationalise’ its 2020 spending. “The recent COVID-19 outbreak and its rapid spread illustrate the importance of agility and adaptability in an ever-changing global landscape,” he said.

Meanwhile, oil prices collapsed by up to 30% last week after Saudi Arabia announced it would ramp up production after Russia failed to agree on an extension to OPEC-led supply cuts.

The onset of a price war between the world’s two largest producers exacerbated the impact of the coronavirus on the oil market, with some analysts estimating that global oil demand could be heading for its biggest annual decline.

Aramco’s share price fell below its IPO price last week for the first time since the company listed on the domestic Tadawul exchange in December. The record $29.4 billion IPO valued Aramco at $1.7 trillion.