OIL

Saudi’s national oil company Aramco has posted a net income of USD 27.3 billion, with cash flow from operating activities at USD 33.6 billion in the first quarter of 2024.

The company said global market conditions in the first three months of the year witnessed improvement, primarily attributed to increased crude oil prices resulting from lower global oil inventories and higher forecasted demand. 

Leveraging its low-cost upstream operations and strategically integrated downstream business, Aramco capitalised on these market dynamics, delivering robust earnings and free cash flow.

In line with its commitment to maximising shareholder value, the board declared a base dividend of USD 20.3 billion and the fourth distribution of performance-linked dividends of USD 10.8 billion, amounting to a total declared dividends of USD 31.1 billion for the first quarter of 2024.

The company remains committed to meeting the world's growing need for affordable and reliable energy, and is implementing a capital programme focused on upstream liquids and gas, downstream liquids to chemicals, and new energies such as renewables, lower-carbon fuels, blue ammonia, and hydrogen.

Capital expenditures in the first quarter reached USD 10.8 billion, reflecting Aramco's commitment to capturing unique growth opportunities and creating long-term shareholder value.

The energy company achieved total hydrocarbon production of 12.4 million barrels of oil equivalent (mboed) in the first quarter. Notably, it received a directive in January 2024 to maintain the maximum sustainable capacity (MSC) at 12.0 million barrels per day (mmbpd), which will not impact announced near-term projects. 

Key developments include ongoing construction activities for the Dammam development project and progress on the Marjan, Berri, and Zuluf crude oil increments, all poised to enhance production capacity and operational flexibility

GAS PRODUCTION AND LNG INITIATIVES

As part of its strategy to increase gas production and develop an integrated global LNG business, Aramco announced significant developments in the quarter. These include the addition of reserves at the Jafurah unconventional field, progress on the Jafurah Gas Plant, and advancements in the Tanajib Gas Plant. 

Additionally, the company awarded contracts for the expansion of the Fadhili Gas Plant and acquired a minority stake in MidOcean, enhancing its presence in the Australian LNG market.

The Saudi energy firm continued to expand its downstream business, demonstrating reliable operations and securing outlets for its refined products. Key developments include the groundbreaking ceremony for the SABIC Fujian Petrochemical Complex in China, aimed at diversifying feedstock sources and expanding manufacturing presence in Asia.

Furthermore, Aramco completed the acquisition of Esmax, a downstream fuels and lubricants retailer in Chile, marking its first downstream retail investment in South America and strengthening its downstream value chain.

GLOBAL MARKETS

The Organization for the Petroleum exporting Countries (OPEC) expects year-on-year (y-o-y) global oil demand to increase by 2.2 mmbpd, driven mainly by non-OECD regions particularly China, the Middle East, and other Asia. Quarterly, demand growth is forecasted at around 2 mmbpd y-o-y in the first quarter, 2.2 mmbpd y-o-y in 2Q24, 2.7 mmbpd y-o-y in 3Q24, and 2.1 mmbpd y-o-y in 4Q24.

During the summer months, demand for transportation fuels is anticipated to rise, with jet/kerosene expected to grow by 0.6 mmbpd y-o-y in the second quarter and by 0.8 mmbpd y-o-y in the third quarter. Demand for gasoline and diesel is projected to increase by 0.4 mmbpd y-o-y and 0.2 mmbpd y-o-y, respectively, in the second quarter, with gasoline consumption rising further by 0.8 mmbpd y-o-y and diesel by 0.3 mmbpd y-o-y in 3Q24.

In OECD countries, the US driving season and expected economic activity pickup in the second half of 2024 are likely to drive additional demand for transportation fuels. In non-OECD nations, China, the Middle East, and India are expected to lead oil demand growth, supported by mobility and industrial activities.

Gasoline markets strengthened on the Gulf Coast due to tight availability and high octane prices, while Europe faced upward pressure on diesel markets due to ongoing geopolitical tension. Asian markets remained well supplied, with strong refinery runs, particularly in India, and product supplies from the Middle East. 

The outlook for gasoline and diesel demand in the Atlantic Basin is expected to create stronger East-to-West export opportunities, while jet/kerosene markets are projected to show upward potential as air travel resumes. However, naphtha demand may remain soft despite projections for robust gasoline blending demand. Outside the US, propane may become the preferred petrochemical feedstock due to stronger margins. 

Given the robust oil demand outlook for summer, careful market monitoring is warranted to ensure a sound and sustainable market balance. The countries participating in the Declaration of Cooperation (DoC) remain vigilant and prepared to act, if necessary, to address market requirements.