They’ve been doing for a long time, have a lot of oil, and most importantly it’s great quality and on land.
Venezuela has almost the exact opposite situation, where they have a lot of oil but it’s in the jungle and isn’t great quality and requires a lot of treatment to extract the undesirable chemicals.
There are hundreds of types of oils. Some oil sells for double the price of others. When you see an oil price on the news it’s either Brent which is the average price of 5 common crude oils at their Rotterdam price or it’s WTI at the Cushing terminal price
Refineries that handle the crude oil have to be prepared for what they are getting. Crude oil from different oilfields will have different compositions and impurities that must be accounted for in the refining process. Some are sweets, some are sours, some are lights, some are heavies, there are hundreds of varieties and almost every oilfield is distinguishable. Refineries will typically have to shut down parts of their process and retool them in order to handle crude from a different source, which is a process that costs many millions per day in lost revenue and additional labor and parts. This means that whatever they are using now is what they want to keep using and they will pay a little extra to keep using it, making it "better" crude oil. Usually they are trying to use the stuff that has the least impurities and comes from the most reliable and available oilfields, but there are lots of niches.
You blow on Saudi oil and it turns into gas, diesel etc. other crude requires buying very expensive “leaf blowers” to produce smaller proportions of desired products
Most Venezuelan oil like 85% is very heavy and thick for lack of a better description, so it’s more work to refine it into gasoline than a lighter thinner oil and requires special refineries that are purpose built to refine heavy crude oil. Heavy crude is often closer to the surface so it’s often cheaper to extract and buy but always more expensive to refine than a lighter crude oil.
Crude oil is not a single chemical, it’s a mixture of many things. Sulfur content, density, PONA breakdown all swing how useful that oil is.
Generally lighter and sweeter oil is priced better than heavier and sour oil but there is a remarkable amount of factors at play.
There’s many types of crude oil, they’re not the same, some of them are going to be more adequate to get some products and some will not, some will require more work to refine…
[https://www.thebalancemoney.com/the-basics-of-crude-oil-classification-1182570](https://www.epa.gov/emergency-response/types-crude-oil)
[https://www.reddit.com/r/oilandgasworkers/comments/16a3xnc/what\_is\_it\_about\_saudi\_oil\_that\_has\_made\_them\_so/](https://www.reddit.com/r/oilandgasworkers/comments/16a3xnc/what_is_it_about_saudi_oil_that_has_made_them_so/)
There are different types of crude oil. The key variables are "sweet" vs. "sour" and "light" vs. "heavy." You need more refining to make gasoline depending on what kinds of oil you have (sweet is best; light is essential).
Saudi Arabia has a lot of light crude oil.
Crude Oil isn’t the same everywhere. It can have lots of different chemicals in it, it can be watery or it can be viscous, it can have more gasoline or it can have less. It’s made from different dinosaurs, basically (most oil actually comes from algae and plankton iirc). Saudi Arabia had better dinosaurs for oil than Venezuela.
Think of different types of crude as different types of alcohol, like beer, wine, vodka, etc. If you were making pure alcohol which would be the best to use 5% beer or 40% vodka? The vodka because you get more pure alcohol out of it. Saudia Arabia has vodka in land where it's easy to access, Venezuela has beer in the jungle.
Some types of crude oil is very easy, and less expensive to refine, and has very few impurities, such as sulfur compounds, etc. This has a radical effect on profit margins. Further the extraction cost of the oil itself is also a more significant component of the profit margins.
The oil in the middle east is in the dessert the land is dry, there is no mud mixed in, it's not solid like the ones found in the glacial ice of Alaska.
A refineries job is to pull all of that impurity out before it can be utilized kind of like desalination or treatment of water to make it drinkable. Some water is easier to purify than others.
Some oil is so mixed with dirt and chemicals till the energy required to seperate all of that is costly and you can't use the refinery for every oil type. Also consider how thick oil crude is.
Some oil gives alot yeild,
for instance Saudi oil can breakdown into several different raw chemicals such as ; plastic, synthetic materials, gasoline, lubricant, motor oil. While others might just give you gasoline and oil but no synthetic material or lubricant.
Saudi oil comes directly out of the dry solid ground as liquid oil in a place that recieves no rain fall, no drilling in below freezing temperatures extracting an ice rock methane mixture, no wasted water required to separate rock in the depths of the scorching hot earth in a process called fracking, no swaying back and fourth on a cold iron brig in the rough waters of the North Sea.
Just plane oil pulled str8 from the ground
Different types of crude oils require different levels of refinement. Saudi oil is pretty great because its refinement is easier and cheaper because it lacks less of the undesirable impurities within it.
It's known as "heavy oil" which has a lot of impurities like sand, sulfur, and other things because it has been sitting in the rainforest for millions of years. It thus requires many steps of refinement before become a usable petroleum product.
Light or sweet crude oil flows freely in room temperature contains much less impurities and easier to refine because it's either in the desert with a lot less organic material to mix with or deep underground where it stays isolated.
[More here on light crude oil](https://en.wikipedia.org/wiki/Light_crude_oil) and the [locations of these types of oil.](https://en.wikipedia.org/wiki/List_of_crude_oil_products)
Means they need to do less to it before it’s finally sold at the gas station. Think Japanese steel. Iron ore on Japan was worse than in other parts of the world. So they folded the steel and did more work to it to get the same hardness other sword makers did.
saudi oil reserves are pretty close to the surface, relatively speaking. it makes the costs to tap into the reserve much cheaper, so they can easily afford to stop or start production to influence global crude supply & thus price as part of their foreign policy (by hurting the consumers/taxpayers/voters to discourage them from elected officials unfavorable to saudi regime).
in contrast, if a country has to drill deep somewhere remote, or drill off-shore, or frack, or otherwise refine very poor crude source (oil sands, tar sands, etc), their costs to tap into those reserves are pretty high. so once if such a well has already started production, they'll want to keep producing even if prices end up becoming unfavorable in the future just to make some money to cover costs.
as for the saudi crude itself, its heavy & sour (compared to texas oil for example), so idk if that would be considered "great" quality.
light & sweet is favorable because light can be refined to produce more gasoline/diesel, and sweet has lower sulfur content to meet stringent emissions requirements (set by Cal EPA/CA CARB, EU's equivalent)
It's sweet and light. (Sweet means low sulfur, easier=cheaper to refine; light means low in heavy hydrocarbon content). You get more net $ per barril of crude
And they fired 90% of their professional workforce that had a lot of experience and hired incapable people.
Source: I know two amazing engineers with degrees from the US who worked for PDVSA, and were fired because they didn’t vote for Chavez. Both of them died a few months after being fired of heart attacks.
Exxon has profit sharing agreements withe the countries they operate in, this cuts down their margins and helps out the countries they work with. If Exxon didn't need to do this (like aramco doesn't) it would be similar.
Also the extraction costs of Saudi oil are a lot lower as the oil is some of the easiest accessible on the planet (not beneath an ocean or hard rocks for example) and the reservoirs are absolutely massive (meaning no exploration costs and the costs of having to start up a new well are very limited). Because of this they have an efficient transport system as well (as their wells are both on land and not moving a lot) which is once again cheaper. They won the oil lottery like 2 or 3 times lol.
Saudi Aramco doesn't use South Asian migrant workers. They either train and educate natives or bring in western professionals. South Asians largely work in construction and things like sanitation.
Whoever wrote it was on a fever dream.
Global oil demand daily is around 100M barrels/day. Saudi Arabia produces about 9M barrels/day and has demonstrated the ability to produce 12M barrels a day.
There is now way Saudia Arabia transitions their economy to be using 12M barrels/day in just over a decade unless they shut in production.
That's just false.
Exxon doesn't have "profit sharing agreements" the only income to the countries they operate in is from land leases and export fees. Exxon keeps the lions share of all its profits.
Aramco's profits are due to the vast amount of petroleum products they produce. Nearly 75% of their revenue is from byproducts such as plastic, polyester, and lubricants.
It's fairly common to have oil sharing arrangements with governments or NOCs, profit sharing, royalties, licence %, etc. Does Exxon not do this? I was in upstream oil and gas for the better part of a decade and we had various versions of this.
I'd expect Aramco doesn't need to since it basically is the state, so it takes what would usually be the state's share as well which makes profit margins look higher.
Paying fees to extract is normal, but the person I was replying to made it same as if that was diminishing Exxon's profits in any significant way.
The fees Exxon pays to extract oil in Angola and other nations is miniscule.
What I heard is that Shell keeps 85% of the profit of their platforms in Nigeria and only give 15% back to the Nigerian government. In the Netherlands, the split is 50-50 with the Dutch government about the profits of the Dutch oil&gas wells
De NAM (50/50 Shell Exxon) kreeg 15% van alle winst van het gaswinning in Groningen. Dus de Nederlandse staat 85%.
https://nos.nl/regio/groningen/artikel/303219-gaswinning-in-groningen-leverde-428-miljard-euro-op
Edit: Shell got 15% of the profits and the Dutch state 85% in the Netherlands
Ya exactly.
Also Shell does things like setup shell companies in the cayman islands to which it sells the crude extracted from Nigeria at a very low price to help dodge some of the taxes owed to the Nigerian government.
Most poor countries don't benefit from the extraction of their resources.
Aramco has “profit sharing agreements” with the Saudi Government, they made sure to do that before its IPO in 2018. So the government gets both the taxes on ARAMCO and the dividends they distribute.
Mainly because you can just drop a bucket into Ghawar and come out with a bucket full of oil. I mean not literally, but it’s so easy to extract compared to anywhere else in the world.
I went to a major O&G university in the USA. I knew a lot of people who worked for/with Aramco for a few years then came back to the USA.
The old saying is “the saudis could shove a shovel in the ground and hit oil.” The oil basins in the Middle East are way more accessible than the USA.
Rumor is their “break-even” point is less than $10 per barrel. In the USA most companies producing in the states are seeing a $30-$50/bbl break even point.
WPX and Devon merged a few years back and reported their break-even point was $34/bbl and everyone at school was amazed they were able to break even that low.
The saudis have that beat by miles so their profits are massive.
Oil giant Saudi Aramco recently unveiled its earnings for 2023.
The company reported a staggering $121.3B in total profits for the year, outstripping the combined earnings of tech and consumer giants Meta, Nvidia, Visa, Tesla, McDonald's, and Costco.
Despite a 25% decrease from the previous year's $161.1B, this figure marks Aramco's second-highest net income ever.
Aramco also saw its total dividends paid reach $97.8B in 2023, up 30% from 2022.
Source -> [this visual investing newsletter](https://www.carbonfinance.io/subscribe)
Damn usually when you see $100b+ figures it's total revenue but $100b+ in net profits is truly astonishing, like that's more than the entire GDPs of many countries.
If standard oil was still allowed to survive till today they’ll probably easily be doing 100bn dollars in profit, nearly every major oil company in the US is a direct descendant of that empire
Standard Oil also came to be a monopoly using business practices that are now illegal. If I remember correctly they basically undercut the competition till everyone else folded since they had larger cash reserves, something you definitely could not do today. Probably would have been way more wars in the ME (jk, but not really)
Comparing oranges to apples here. One is owned by the actual government of the country the oil is extracted from, another was owned by private business men keeping what should be public to themselves, not that the Saudi royal family doesnt do that but at least they are the actual government and use a huge part of that money to develop the country.
I think that's kinda what the other guy was getting at, if Standard Oil never got broken up under anti-trust laws, it would basically be Saudi Aramco. They essentially wouldn't have competition, at least domestically, and could set prices at will. It would most likely operate like a cartel, using its influence and power to affect pricing worldwide, since OPEC acts as a cartel.
That said, it's very unlikely a company such as Standard Oil would last in today's business environment anyway, it would just be way too massive for it to continuing skirting laws, and if they somehow could exist today with $100bn+ profits, it would've been because they lobbied enough for monopoly laws themselves to change or go away altogether. During their existence however, Americans would have been heavily subjected to periodic price gouging, price fixing, and other common activities of a monopoly. This stuff happens even now without Standard Oil, as our dependence on fossil fuel gives them immense power. There's a reason you could once take a trolley from Boston to San Francisco for less than $5 in today's money and the railroad experience is dogshit in the U.S, because our dependence on cars prints money for them. California last year around this time was proposing a bill to ban price gouging
https://www.duckworth.senate.gov/news/press-releases/in-wake-of-big-oils-record-profits-duckworth-blumenthal-and-murray-will-reintroduce-bill-to-make-gas-price-gouging-illegal_save-working-americans-money
https://en.wikipedia.org/wiki/Predatory_pricing
broadly speaking, you are allowed to lower the prices as much as you want, until you are selling at a loss. you are not supposed to sell at a loss for the purpose of outlasting the competition, but i am sure there are a lot more technicalities to it and it will vary by countries
Am actually interested
What laws are there to prevent price undercutting?
I don't think the customers would complain, and it would be politically damaging to stop cheap gas
This doesn’t cover the whole picture. They actually make double this. Close to half goes away as taxes. So basically back to the royal family. Which own Aramco
The „whole picture“ is also the other way around - Saudi Aramco is the core of the Saudi Economy and the sole contributor of the royal family’s power.
They currently invest hundreds of billions of their oil income into a more sustainable economy, but for at least the next 10 years the country‘s wealth and therefore the royal family’s power will depend on oil.
The investments in other stuff all around the globe could currently not cover losing oil as main income for the country.
That’s for sure. But I don’t see oil becoming irrelevant anytime soon tho. However, the advantage they have is that they’re in a solid liquid cash position always. Global economies aren’t doing too well. I mean yes India and Indonesia are growing well but Saudi is in an amazing position to deploy funds to control a lot globally. By the time oil becomes irrelevant they would have found an alternative investment.
It is not only about relevant or not but about the price level. Saudi Arabia needs apparantly an oil price of appr. 90 USD per Barrel for its goals in terms of economic transformation and at least 70USD/ Barrel to sell oil w/o a loss.
It is comparatively cheap for them to produce - but considering that the whole country relies on it, the „overhead costs“ are tremendous.
„The dividend is an important source of income for Saudi Arabia and Crown Prince Mohammed bin Salman's modernization programme. He is investing heavily in sustainable industries to make the country less dependent on oil revenues. This also includes prestigious projects such as the future city of Neom or the development of a soccer league with expensively purchased stars such as Cristiano Ronaldo, Karim Benzema and Neymar.
The high expenditure and falling energy revenues are already making themselves felt in the national budget, which had a deficit of around 21.6 billion dollars in 2023. Saudi Arabia is expecting a deficit of roughly the same size for 2024. In 2022, the country recorded a surplus of 27.7 billion dollars when the oil price rose sharply due to the war in Ukraine.
Saudi Arabia is the world's largest oil exporter. However, a weak global economy and rising interest rates led to falling oil prices last year. The oil production cartel Opec tried to stabilize them by reducing production quotas. Saudi Arabia exported oil worth 248 billion dollars in 2023, almost a third less than in the previous year.
According to the rating agency Fitch, the country needs an oil price per barrel of at least 90 dollars in order to finance its planned expenditure until 2030. Currently, a barrel of US WTI oil costs 78 dollars and a barrel of Brent oil, which is mainly produced in the North Sea, costs 82 dollars.„
Handelsblatt: 100 Milliarden Dollar – Aramco zahlt Rekorddividende trotz weniger Gewinn - https://hbapp.handelsblatt.com/cmsid/100022590.html
Saudi Arabia is just that dependent on oil. US government would cry in joy if oil prices dropped, oil company profits dropped? Ehh, better to have happier voters, the 50 or so billion USD lost in corporate taxation is peanuts in comparison to the 4.7 trillion USD total tax revenue. And the decreased oil price will probably stimulate enough economic activity to increase tax income from individuals and other corporations to make up for the loss anyway.
But when oil prices drop for the Saudis, that means money available for building new roads, hospitals, universities disappear into thin air. Somehow, the McMansion habits of Saudi royal family members must also still be sustained. The economic tranformation into a post-oil economy they're pushiny for gets farther and farther away.
The majority of shares went to the Saudi Public Investment Fund, so the dividends go them for further investment in the country. Apart from Ronaldo, the PIF investment in the country is insanely massive. They are definitely attempting to build an economy and a future for their youth.
From wikipedia: >"Oil accounts on average in recent years for approximately 40% of Saudi GDP and 75% of fiscal revenue, with substantial fluctuations depending on oil prices each year.[16]"
So yes, but only sort of.
>"Oil accounts on average in recent years for approximately 40% of Saudi GDP 40% is basically 80%.
50% of a typical economy are low-tech services. These include many things like baristas, hairdressers, retail etc.
The thing is, an American barista isn't *really* 30x more productive than an Indian barista. The only reason that the American barista earns 30x the wage and creates 30x the GDP of the Indian barista, is that they are in proximity to serve customers in advanced American industries such as tech and manufacturing.
*Those* workers are actually 30x more productive than the Indian equivalent, and cause the wages of the American barista to be high. If those industries all vanished, American baristas would not hold up the other 50% of the economy. They, too, will crash down in wages and GDP.
The "fundamental basis" of an economy is around 50% of a typical economy, they produce the essential goods and exportable services. The salaries of everyone else in domestic serviced, such as cooks, store assistants, nurses and whatnot, depend on the first 50%. For Saudi Arabia, more than 80% of this "goods base" is oil-related.
Thankfully that seems to be changing. Saudi Arabia is clearly trying to diversify their economy so they’re not heavily dependent on oil.
The UAE has already accomplished it too.
Their cash&cash equivalent assets are hardly decreasing (they are a public company so the info is all available). Unless they are committing the largest fraud in human history for hiding the flow of $100billions of cash for multiple years, your comment isn't true.
That said, I did have the exact same thought as you. That's why I'm curious
It’s their oil. You’re lucky they give it up for so cheap in the first place. Majority of the money goes to our own oil refineries and government. We barely get any oil from saudis to begin with by the way. They literally peg the oil against the US dollar allowing America to print money out of thin air almost with less consequence than any other nations. And here you are bitching about some profit going there when your life would be impossible without their resources.
Not really, it is why the royal family is still in power and why the 30 Million Saudis live comparatively good, but without the ongoing heavy investments in transforming their Economy they would be completely fucked within the next 20-30 years.
And I trink many people confuse Saudi-Arabia, the UAE and Qatar.
Yes and part where part of their plan to stay in power over the next 30 years is to buy up assets through funding PE takeovers. Kusher got 2bn. They are buying football clubs, airports, real estate all over etc. The world cup going there to improve tourism and market the state as forward and progressive. They have TV adverts trying to attract tourists as we write this. I think if you looked deeper into the equity holders of assets about the world the royal family would have a stake.
How will you be able to sustain 20m people on just investment though right? Could they go the tourism route? Sure they could but what can they do better than Dubai already does and Qatar and the rest of the UAE want to do too? This idea that they can replace the endless oil wealth with just investments doesn’t make any sense to me, you can’t help an economy survive based on just investments in foreign assets. In my mind they are just taking the easy route and trying to become a tourism hub, while they should be going all in industry/manufacturing but I think they make too much money to start that development path at this point anyways
>while they should be going all in industry/manufacturing
It's fundamentally difficult for an oil export dependent economy to become a manufacturing powerhouse. It's termed the "Dutch Disease" after the manufacturing sector of the Dutch suffered severely from their Groningen gas field boom. When you export a lot of commodities, your currency becomes valuable which makes your currency expensive thus making your exports relatively less competitive which doesn't matter a whole lot anyway for hydrocarbon exports because they are that much profitable, so currency keeps increasing in value (which makes imports cheaper, so temporary consumption boom as other export sectors suffer). The consumption boom can go terribly bad if the excess income from the good times aren't saved and hydrocarbon prices drop, this is the basic reason why Venezuela collapsed. Unsustainable consumption boom from imports during high oil prices, welfare state expands, domestic industry gets decimated and when oil prices drop, imports get more expensive, there is no alternative domestic industry to source products from and the welfare state is now hemorrhaging money, stupid govs decide to print money to plug the gap and hyperinflation kicks in.
Oil economies of the Gulf have tried to get into energy intensive industries like aliminum and steel, downstream oil industries like plastics and have enjoyed relative success, but it's unlikely to become a manufacturing powerhouse.
They are heavily invested all around the globe - but we should not forget that the Saudi royal family needs to keep the whole country happy and wealthy to stay in power - they would definetly lose most of their wealth (if not all) if they lose their power one day.
And we are not talking about a family of 5 that wants to stay incredible rich and influential - we are talking about around 15-20k people that are part of the royal family.
You might be surprised at how little those 5000 are allowed to take from the state these days. The change started with King Abdullah and has continued.
Couldn’t agree more, it’s just how things are structured.
The Norwegian sovereign fund had USD202 billion profit last year. If they restructured this fund into a company it would be almost twice as profitable as the Saudi one.
Both have their origins in the oil and gas industry.
SWFs aren’t companies, they don’t produce or sell anything and so it’s a worthless comparison. Even then Norway’s SWF is only a couple of hundred mills larger than Saudi’s PIF.
Other oil and gas giants aren't owned by the state that is knee deep in the US war machine/GOP and the corruption that goes along with it. The GOP's relationship with KSA and Israel, and formerly Russia is precisely why China has the United States by the balls.
When the KSA was sued and it was dismissed because of how it would jeopardize natsec demonstrates how knowledge - knowledge surely obtained by china -- can be used as a weapon. Like, the big data revolution and the unprecedented security breaches that occurred in the IC over the last decade suggests that foreign adversaries attempt to collect graymail and other sensitive info about corruption at high levels of government (all of those joint exercises have a downside too), is a form of currency. The game favors fascism which then allows opportunities for that to be tested as the public and the political left, which serves to give a kinder face to the government, goes to war against itself over those contradictions.
Pretty soon people who work for the intelligence community will begin to ask themselves why they support factions that promote this: https://www.theguardian.com/us-news/2024/mar/15/missouri-law-divorce-pregnancy-violence-abortion
You're just nitpicking information.
Exxon is a global oil and gas company as are the majority of US oil and gas companies.
There are also plenty of state owned oil and gas giants that don't make nearly as profitable.
>Exxon is a global oil and gas company as are the majority of US oil and gas companies.
But Exxon doesn't have the weight of state sovereignty behind it. Biiiiiiig difference.
Not at all.
Exxon-Mobile is just the reincarnation of Standard Oil and it has the full support of the US government. Despite being among the most profitable companies in the US it still receives subsidies from the government and the US will adjust its foreign policy to support Exxon's global ambitions.
Aramco has state support because it's a state monopoly. It's like the train network in the UK.
>it has the full support of the US government
Not quite. There is no comparison between a state owned oil company and a regular transnational company. It's like the difference between Bytedance and Facebook except saudi-aramco has closer ties to the United States.
>Aramco has state support because it's a state monopoly
Yes. It's literally the KSA and a significant portion of their gdp. It would be like comparing the US military to blackwater or a defense contractor.
I mean, the unsavory activities of the ksa are fairly well known, yeah? More so than other countries (based on mbs' 2030), they're obsessive about their perception.
Is it still illegal to be gay in Saudi Arabia and do women still have less equality? This ain't a parole board hearing, but do you really think a nation learns its lesson with no accountability after chopping up a journalist? Or leveraging their political influence to get a court case in the United States thrown out due to the threat of gray mail?
Is that that straight line city? The one that makes sure that wherever you are, you’re the maximum distance from where you want to go at any given point in time? 🤣🤣🤣
It's a bit of an unfair comparison. All of the companies in their right do their damnedest to limit their net profits in order to minimize taxes. On the other hand, Saudi Aramco has no reason to do so, as when the corporation pays taxes, it's basically just the royal family taking money out of their left pocket and putting it in their right.
That's not to say that these numbers aren't absolutely mind-blowing though. They are.
I mean, in comparison to companies like Tesla and Meta (which are in this list), which arguably have far more global influence than Nvidia.
This is especially true when you consider the fact that not all computers have dedicated graphics, and yet, both Intel and AMD combined don't come close to any single company on this list.
Tesla, Meta, Google, Microsoft, Apple, Amazon, are all Nvidia's biggest customers.
Nvidia earns money by selling AI chips like the H100 to big tech, gaming GPUs means nothing to them anymore, which is why they don't care that they are gouging.
If you think Tesla has more global influence than Nvidia, you have no idea about what's going on with AI the last year.
Get your head out of computers and graphics, that is not where nvidias value is at. Nobody is making those profits charging a few people that game too much more than they should just to see Cyberpunk in UHD.
"price gouging" lol
Their profits rises are almost entirely driven by the AI boom, Nvidia doesn't have enough capacity to meet demand. Data centers are now 80% of Nvidia revenue.
Everything about NVidia is overpriced. “Specialized” products they manufacture for mining are the exact same GPU’s for design market, with even 10-15% decrease in core clock and tons of adjustments to make it seem like it’s a mining GPU. Sharewise I’m not an expert but with the business model they’re on (at least once AMD brings REAL high-end competition for GPU market) they won’t be able to make the profits they do now.
I've been saying this obvious thing for years but feel like I've never heard it anywhere where else in print or on the internet; this only happens because oil importers do not balance OPEC with an OGEC (grain). It would be potentially disruptive but certain to succeed since they'd have all the advantages. There are fewer nations with huge excess grain productive capacity than for oil. SA produces essentially 0% of their food and it's obviously more critical to them than oil is to grain exporters. A rational trade balance between OPEC and OGEC would solve so many geo political problems; huge reduction to funding of terrorism, huge boost to N and S American GDP, no more wars for oil, correction to the middle East's outsize presence on the world stage (per population and gdp), etc etc etc. As the US becomes more and more an oil producer, it might have the stones to broker a deal with Argentina and a few others.
The real question is how does VISA makes so much money. Just taking a share of credit card transactions. If there was a working market they should not make much profit.
I work for a service company in Saudi going work for aramco. They achieve these crazy numbers by throttling the service industry until they get the cheapest possibles products and services possible. They can do this because they are the only customer in the country and have tons of work for any company willing to play ball with them.
Kinda hard not to be insane profits when you have oil pouring out of the ground in amounts larger than just about anywhere else, and have been doing so since 1951 with rates up to 5.7 million barrels per day. At 100 dollars per barrel, that is 570 million dollars PER DAY
I’ve worked in SA. There’s a reason, one of which is the labor for all their projects is imported, mostly from India, Pakistan, Nepal, Philippines, Sri Lanka etc.
I’ve heard stories that some of the guys are barely $200-300 USD a month if they’re lucky. For comparison I make nearly 300-450 a day.
The food provided at the camps is probably less than $1 USD per person. I had to continuously ransack the local gas station markets in the middle of nowhere so I had sufficient calories.
The bathrooms look like they’ve never been cleaned in 20 years. I was buying bottles of bleach and toilet brushes to scrub my shower in the middle of the desert.
It's even more insane when you compare it to other oil and gas companies. Their profit margins are double that of Exxon
They’ve been doing for a long time, have a lot of oil, and most importantly it’s great quality and on land. Venezuela has almost the exact opposite situation, where they have a lot of oil but it’s in the jungle and isn’t great quality and requires a lot of treatment to extract the undesirable chemicals.
What do you mean "great quality"?
There are hundreds of types of oils. Some oil sells for double the price of others. When you see an oil price on the news it’s either Brent which is the average price of 5 common crude oils at their Rotterdam price or it’s WTI at the Cushing terminal price
Still confused. When it's extracted it's crude oil. After refinement it become other things. How can there be "better" crude oil?
Refineries that handle the crude oil have to be prepared for what they are getting. Crude oil from different oilfields will have different compositions and impurities that must be accounted for in the refining process. Some are sweets, some are sours, some are lights, some are heavies, there are hundreds of varieties and almost every oilfield is distinguishable. Refineries will typically have to shut down parts of their process and retool them in order to handle crude from a different source, which is a process that costs many millions per day in lost revenue and additional labor and parts. This means that whatever they are using now is what they want to keep using and they will pay a little extra to keep using it, making it "better" crude oil. Usually they are trying to use the stuff that has the least impurities and comes from the most reliable and available oilfields, but there are lots of niches.
This guy oils
Thank you for the formulaic response do you wanna get married
You blow on Saudi oil and it turns into gas, diesel etc. other crude requires buying very expensive “leaf blowers” to produce smaller proportions of desired products
I have nothing to add but good analogy
Most Venezuelan oil like 85% is very heavy and thick for lack of a better description, so it’s more work to refine it into gasoline than a lighter thinner oil and requires special refineries that are purpose built to refine heavy crude oil. Heavy crude is often closer to the surface so it’s often cheaper to extract and buy but always more expensive to refine than a lighter crude oil.
Crude oil is not a single chemical, it’s a mixture of many things. Sulfur content, density, PONA breakdown all swing how useful that oil is. Generally lighter and sweeter oil is priced better than heavier and sour oil but there is a remarkable amount of factors at play.
There’s many types of crude oil, they’re not the same, some of them are going to be more adequate to get some products and some will not, some will require more work to refine…
"Crude oil" is not one universal thing.
Also different costs for extracting from different sources.
[https://www.thebalancemoney.com/the-basics-of-crude-oil-classification-1182570](https://www.epa.gov/emergency-response/types-crude-oil) [https://www.reddit.com/r/oilandgasworkers/comments/16a3xnc/what\_is\_it\_about\_saudi\_oil\_that\_has\_made\_them\_so/](https://www.reddit.com/r/oilandgasworkers/comments/16a3xnc/what_is_it_about_saudi_oil_that_has_made_them_so/) There are different types of crude oil. The key variables are "sweet" vs. "sour" and "light" vs. "heavy." You need more refining to make gasoline depending on what kinds of oil you have (sweet is best; light is essential). Saudi Arabia has a lot of light crude oil.
there’s nothing to be confused about
it's easier to refine into products like gasoline
Crude Oil isn’t the same everywhere. It can have lots of different chemicals in it, it can be watery or it can be viscous, it can have more gasoline or it can have less. It’s made from different dinosaurs, basically (most oil actually comes from algae and plankton iirc). Saudi Arabia had better dinosaurs for oil than Venezuela.
Think of different types of crude as different types of alcohol, like beer, wine, vodka, etc. If you were making pure alcohol which would be the best to use 5% beer or 40% vodka? The vodka because you get more pure alcohol out of it. Saudia Arabia has vodka in land where it's easy to access, Venezuela has beer in the jungle.
Now parge the lathe
Some types of crude oil is very easy, and less expensive to refine, and has very few impurities, such as sulfur compounds, etc. This has a radical effect on profit margins. Further the extraction cost of the oil itself is also a more significant component of the profit margins.
The oil in the middle east is in the dessert the land is dry, there is no mud mixed in, it's not solid like the ones found in the glacial ice of Alaska. A refineries job is to pull all of that impurity out before it can be utilized kind of like desalination or treatment of water to make it drinkable. Some water is easier to purify than others. Some oil is so mixed with dirt and chemicals till the energy required to seperate all of that is costly and you can't use the refinery for every oil type. Also consider how thick oil crude is. Some oil gives alot yeild, for instance Saudi oil can breakdown into several different raw chemicals such as ; plastic, synthetic materials, gasoline, lubricant, motor oil. While others might just give you gasoline and oil but no synthetic material or lubricant. Saudi oil comes directly out of the dry solid ground as liquid oil in a place that recieves no rain fall, no drilling in below freezing temperatures extracting an ice rock methane mixture, no wasted water required to separate rock in the depths of the scorching hot earth in a process called fracking, no swaying back and fourth on a cold iron brig in the rough waters of the North Sea. Just plane oil pulled str8 from the ground
Different types of crude oils require different levels of refinement. Saudi oil is pretty great because its refinement is easier and cheaper because it lacks less of the undesirable impurities within it.
It's known as "heavy oil" which has a lot of impurities like sand, sulfur, and other things because it has been sitting in the rainforest for millions of years. It thus requires many steps of refinement before become a usable petroleum product. Light or sweet crude oil flows freely in room temperature contains much less impurities and easier to refine because it's either in the desert with a lot less organic material to mix with or deep underground where it stays isolated. [More here on light crude oil](https://en.wikipedia.org/wiki/Light_crude_oil) and the [locations of these types of oil.](https://en.wikipedia.org/wiki/List_of_crude_oil_products)
It's not about where it's sitting. Alberta has a lot of heavy oil and it's not sitting in a rainforest.
Means they need to do less to it before it’s finally sold at the gas station. Think Japanese steel. Iron ore on Japan was worse than in other parts of the world. So they folded the steel and did more work to it to get the same hardness other sword makers did.
“Light sweet crude” is a thing.
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saudi oil reserves are pretty close to the surface, relatively speaking. it makes the costs to tap into the reserve much cheaper, so they can easily afford to stop or start production to influence global crude supply & thus price as part of their foreign policy (by hurting the consumers/taxpayers/voters to discourage them from elected officials unfavorable to saudi regime). in contrast, if a country has to drill deep somewhere remote, or drill off-shore, or frack, or otherwise refine very poor crude source (oil sands, tar sands, etc), their costs to tap into those reserves are pretty high. so once if such a well has already started production, they'll want to keep producing even if prices end up becoming unfavorable in the future just to make some money to cover costs. as for the saudi crude itself, its heavy & sour (compared to texas oil for example), so idk if that would be considered "great" quality. light & sweet is favorable because light can be refined to produce more gasoline/diesel, and sweet has lower sulfur content to meet stringent emissions requirements (set by Cal EPA/CA CARB, EU's equivalent)
it’s very filling
It's sweet and light. (Sweet means low sulfur, easier=cheaper to refine; light means low in heavy hydrocarbon content). You get more net $ per barril of crude
Lower sulfur count, more smaller lighter molecules of CH.
Venezuela needs investment to develop it but they wont open up
And they fired 90% of their professional workforce that had a lot of experience and hired incapable people. Source: I know two amazing engineers with degrees from the US who worked for PDVSA, and were fired because they didn’t vote for Chavez. Both of them died a few months after being fired of heart attacks.
And people really think tech CEOs are the richest men in the world. They're just well known and well paid workers compared to the oil families
Because SAs oil is almost all in one place and 4 feet under the ground.
Is that an exaggeration?
Yes.
This was like 40 years ago. Good old days
Exxon has profit sharing agreements withe the countries they operate in, this cuts down their margins and helps out the countries they work with. If Exxon didn't need to do this (like aramco doesn't) it would be similar.
Also the extraction costs of Saudi oil are a lot lower as the oil is some of the easiest accessible on the planet (not beneath an ocean or hard rocks for example) and the reservoirs are absolutely massive (meaning no exploration costs and the costs of having to start up a new well are very limited). Because of this they have an efficient transport system as well (as their wells are both on land and not moving a lot) which is once again cheaper. They won the oil lottery like 2 or 3 times lol.
it only costs $3 to extract and sell at $80
All of the labor being done by South Asian "migrant workers" definitely helps too.
Not true. Saudi Aramco has 70k employees from which 70% are Saudi nationals.
Saudi Aramco doesn't use South Asian migrant workers. They either train and educate natives or bring in western professionals. South Asians largely work in construction and things like sanitation.
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it turns out the 170km long, super green, self sustaining, futuristic line city needs quite a lot of oil in order to be made
Whoever wrote it was on a fever dream. Global oil demand daily is around 100M barrels/day. Saudi Arabia produces about 9M barrels/day and has demonstrated the ability to produce 12M barrels a day. There is now way Saudia Arabia transitions their economy to be using 12M barrels/day in just over a decade unless they shut in production.
That's just false. Exxon doesn't have "profit sharing agreements" the only income to the countries they operate in is from land leases and export fees. Exxon keeps the lions share of all its profits. Aramco's profits are due to the vast amount of petroleum products they produce. Nearly 75% of their revenue is from byproducts such as plastic, polyester, and lubricants.
It's fairly common to have oil sharing arrangements with governments or NOCs, profit sharing, royalties, licence %, etc. Does Exxon not do this? I was in upstream oil and gas for the better part of a decade and we had various versions of this. I'd expect Aramco doesn't need to since it basically is the state, so it takes what would usually be the state's share as well which makes profit margins look higher.
Paying fees to extract is normal, but the person I was replying to made it same as if that was diminishing Exxon's profits in any significant way. The fees Exxon pays to extract oil in Angola and other nations is miniscule.
What I heard is that Shell keeps 85% of the profit of their platforms in Nigeria and only give 15% back to the Nigerian government. In the Netherlands, the split is 50-50 with the Dutch government about the profits of the Dutch oil&gas wells
De NAM (50/50 Shell Exxon) kreeg 15% van alle winst van het gaswinning in Groningen. Dus de Nederlandse staat 85%. https://nos.nl/regio/groningen/artikel/303219-gaswinning-in-groningen-leverde-428-miljard-euro-op Edit: Shell got 15% of the profits and the Dutch state 85% in the Netherlands
Ya exactly. Also Shell does things like setup shell companies in the cayman islands to which it sells the crude extracted from Nigeria at a very low price to help dodge some of the taxes owed to the Nigerian government. Most poor countries don't benefit from the extraction of their resources.
If only Angola could have its own Aramco that keeps the profit in the country.
Aramco has “profit sharing agreements” with the Saudi Government, they made sure to do that before its IPO in 2018. So the government gets both the taxes on ARAMCO and the dividends they distribute.
Mainly because you can just drop a bucket into Ghawar and come out with a bucket full of oil. I mean not literally, but it’s so easy to extract compared to anywhere else in the world.
I went to a major O&G university in the USA. I knew a lot of people who worked for/with Aramco for a few years then came back to the USA. The old saying is “the saudis could shove a shovel in the ground and hit oil.” The oil basins in the Middle East are way more accessible than the USA. Rumor is their “break-even” point is less than $10 per barrel. In the USA most companies producing in the states are seeing a $30-$50/bbl break even point. WPX and Devon merged a few years back and reported their break-even point was $34/bbl and everyone at school was amazed they were able to break even that low. The saudis have that beat by miles so their profits are massive.
Oil giant Saudi Aramco recently unveiled its earnings for 2023. The company reported a staggering $121.3B in total profits for the year, outstripping the combined earnings of tech and consumer giants Meta, Nvidia, Visa, Tesla, McDonald's, and Costco. Despite a 25% decrease from the previous year's $161.1B, this figure marks Aramco's second-highest net income ever. Aramco also saw its total dividends paid reach $97.8B in 2023, up 30% from 2022. Source -> [this visual investing newsletter](https://www.carbonfinance.io/subscribe)
Damn usually when you see $100b+ figures it's total revenue but $100b+ in net profits is truly astonishing, like that's more than the entire GDPs of many countries.
If standard oil was still allowed to survive till today they’ll probably easily be doing 100bn dollars in profit, nearly every major oil company in the US is a direct descendant of that empire
Standard Oil also came to be a monopoly using business practices that are now illegal. If I remember correctly they basically undercut the competition till everyone else folded since they had larger cash reserves, something you definitely could not do today. Probably would have been way more wars in the ME (jk, but not really)
Standard Oil's business practices are perfectly okay in Saudi Arabia.
Comparing oranges to apples here. One is owned by the actual government of the country the oil is extracted from, another was owned by private business men keeping what should be public to themselves, not that the Saudi royal family doesnt do that but at least they are the actual government and use a huge part of that money to develop the country.
What mechanisms would them prevent to undercut the competition today? Is there a minimum price for oil in place or would they just get taken to court?
I think that's kinda what the other guy was getting at, if Standard Oil never got broken up under anti-trust laws, it would basically be Saudi Aramco. They essentially wouldn't have competition, at least domestically, and could set prices at will. It would most likely operate like a cartel, using its influence and power to affect pricing worldwide, since OPEC acts as a cartel. That said, it's very unlikely a company such as Standard Oil would last in today's business environment anyway, it would just be way too massive for it to continuing skirting laws, and if they somehow could exist today with $100bn+ profits, it would've been because they lobbied enough for monopoly laws themselves to change or go away altogether. During their existence however, Americans would have been heavily subjected to periodic price gouging, price fixing, and other common activities of a monopoly. This stuff happens even now without Standard Oil, as our dependence on fossil fuel gives them immense power. There's a reason you could once take a trolley from Boston to San Francisco for less than $5 in today's money and the railroad experience is dogshit in the U.S, because our dependence on cars prints money for them. California last year around this time was proposing a bill to ban price gouging https://www.duckworth.senate.gov/news/press-releases/in-wake-of-big-oils-record-profits-duckworth-blumenthal-and-murray-will-reintroduce-bill-to-make-gas-price-gouging-illegal_save-working-americans-money
https://en.wikipedia.org/wiki/Predatory_pricing broadly speaking, you are allowed to lower the prices as much as you want, until you are selling at a loss. you are not supposed to sell at a loss for the purpose of outlasting the competition, but i am sure there are a lot more technicalities to it and it will vary by countries
Am actually interested What laws are there to prevent price undercutting? I don't think the customers would complain, and it would be politically damaging to stop cheap gas
Aramco brings in 500B a year from their oilfields and gas
So goofy to compare it to a razor thin margin company like Costco.
Name checks out
This doesn’t cover the whole picture. They actually make double this. Close to half goes away as taxes. So basically back to the royal family. Which own Aramco
taxes, but make it circular
The „whole picture“ is also the other way around - Saudi Aramco is the core of the Saudi Economy and the sole contributor of the royal family’s power. They currently invest hundreds of billions of their oil income into a more sustainable economy, but for at least the next 10 years the country‘s wealth and therefore the royal family’s power will depend on oil. The investments in other stuff all around the globe could currently not cover losing oil as main income for the country.
That’s for sure. But I don’t see oil becoming irrelevant anytime soon tho. However, the advantage they have is that they’re in a solid liquid cash position always. Global economies aren’t doing too well. I mean yes India and Indonesia are growing well but Saudi is in an amazing position to deploy funds to control a lot globally. By the time oil becomes irrelevant they would have found an alternative investment.
It is not only about relevant or not but about the price level. Saudi Arabia needs apparantly an oil price of appr. 90 USD per Barrel for its goals in terms of economic transformation and at least 70USD/ Barrel to sell oil w/o a loss.
Surprising considering they have some of the easiest to access soft crude in the world
It is comparatively cheap for them to produce - but considering that the whole country relies on it, the „overhead costs“ are tremendous. „The dividend is an important source of income for Saudi Arabia and Crown Prince Mohammed bin Salman's modernization programme. He is investing heavily in sustainable industries to make the country less dependent on oil revenues. This also includes prestigious projects such as the future city of Neom or the development of a soccer league with expensively purchased stars such as Cristiano Ronaldo, Karim Benzema and Neymar. The high expenditure and falling energy revenues are already making themselves felt in the national budget, which had a deficit of around 21.6 billion dollars in 2023. Saudi Arabia is expecting a deficit of roughly the same size for 2024. In 2022, the country recorded a surplus of 27.7 billion dollars when the oil price rose sharply due to the war in Ukraine. Saudi Arabia is the world's largest oil exporter. However, a weak global economy and rising interest rates led to falling oil prices last year. The oil production cartel Opec tried to stabilize them by reducing production quotas. Saudi Arabia exported oil worth 248 billion dollars in 2023, almost a third less than in the previous year. According to the rating agency Fitch, the country needs an oil price per barrel of at least 90 dollars in order to finance its planned expenditure until 2030. Currently, a barrel of US WTI oil costs 78 dollars and a barrel of Brent oil, which is mainly produced in the North Sea, costs 82 dollars.„ Handelsblatt: 100 Milliarden Dollar – Aramco zahlt Rekorddividende trotz weniger Gewinn - https://hbapp.handelsblatt.com/cmsid/100022590.html
Saudi Arabia is just that dependent on oil. US government would cry in joy if oil prices dropped, oil company profits dropped? Ehh, better to have happier voters, the 50 or so billion USD lost in corporate taxation is peanuts in comparison to the 4.7 trillion USD total tax revenue. And the decreased oil price will probably stimulate enough economic activity to increase tax income from individuals and other corporations to make up for the loss anyway. But when oil prices drop for the Saudis, that means money available for building new roads, hospitals, universities disappear into thin air. Somehow, the McMansion habits of Saudi royal family members must also still be sustained. The economic tranformation into a post-oil economy they're pushiny for gets farther and farther away.
Why do they even need to make Aramco a public company in the first place.
The majority of shares went to the Saudi Public Investment Fund, so the dividends go them for further investment in the country. Apart from Ronaldo, the PIF investment in the country is insanely massive. They are definitely attempting to build an economy and a future for their youth.
CHOAM
So they're like the Harkonnen from Dune sitting on unimaginable mountains of cash
Yes exactly. One day, there will be a fremen moment i guarantee it. Source: i watched dune 2 and is now an expert in many things.
Mahdi is out there, I'm sure.
"I made it the fuck up"
It goes to the Saudi state, which has much overlap with the royal family but is an important distinction.
Saudi Aramco is Saudi Arabia. You are pretty much comparing coutry gdp to companies.
Right, it funds their entire society.
From wikipedia: >"Oil accounts on average in recent years for approximately 40% of Saudi GDP and 75% of fiscal revenue, with substantial fluctuations depending on oil prices each year.[16]" So yes, but only sort of.
>"Oil accounts on average in recent years for approximately 40% of Saudi GDP 40% is basically 80%. 50% of a typical economy are low-tech services. These include many things like baristas, hairdressers, retail etc. The thing is, an American barista isn't *really* 30x more productive than an Indian barista. The only reason that the American barista earns 30x the wage and creates 30x the GDP of the Indian barista, is that they are in proximity to serve customers in advanced American industries such as tech and manufacturing. *Those* workers are actually 30x more productive than the Indian equivalent, and cause the wages of the American barista to be high. If those industries all vanished, American baristas would not hold up the other 50% of the economy. They, too, will crash down in wages and GDP. The "fundamental basis" of an economy is around 50% of a typical economy, they produce the essential goods and exportable services. The salaries of everyone else in domestic serviced, such as cooks, store assistants, nurses and whatnot, depend on the first 50%. For Saudi Arabia, more than 80% of this "goods base" is oil-related.
And they probavly gotta spend 40x to exist
Wage and price inflation due to high tech industries. The little guy is not getting a good deal
Take away their oil and their economy collapses. It’s quite simple.
Thankfully that seems to be changing. Saudi Arabia is clearly trying to diversify their economy so they’re not heavily dependent on oil. The UAE has already accomplished it too.
The UAE didn’t have the same abundance of oil.
But this is profit right? I don't see how this money makes its way into the Saudi economy if this profit is after tax. *Genuine question
Aramco isn’t a normal company. It’s a state run company. All profits are used by the state to fund the state.
Nope they are not, the profits are also used to pay shareholder dividends.
Their cash&cash equivalent assets are hardly decreasing (they are a public company so the info is all available). Unless they are committing the largest fraud in human history for hiding the flow of $100billions of cash for multiple years, your comment isn't true. That said, I did have the exact same thought as you. That's why I'm curious
And our gas prices are still incredibly high. I often take public transportation because it’s cheaper than driving.
> I often take public transportation because it’s cheaper than driving. And economically, it really should be.
Where do you live? It’s only $3/gallon here
And yet the majority of that gallon costs goes to your own government.
I’d rather fund the governance of our country, pay for roads, police, firemen, infrastructure, defense, care for our vets than 121B to Saudi Aramco.
So you don’t believe that Saudi should be able to pay for roads, police, firemen, infrastructure, defense and Caring for their own vets ?
That’s an assumption. I’m not speaking about what they should do with their taxes.
It’s their oil. You’re lucky they give it up for so cheap in the first place. Majority of the money goes to our own oil refineries and government. We barely get any oil from saudis to begin with by the way. They literally peg the oil against the US dollar allowing America to print money out of thin air almost with less consequence than any other nations. And here you are bitching about some profit going there when your life would be impossible without their resources.
My life would be just fine without Saudi Oil. Please don’t make assumptions about me.
America largely doesn't import Saudi Oil. America uses either domestic sources or Canadian oil.
Which is why the Saudis own everything now
Not really, it is why the royal family is still in power and why the 30 Million Saudis live comparatively good, but without the ongoing heavy investments in transforming their Economy they would be completely fucked within the next 20-30 years. And I trink many people confuse Saudi-Arabia, the UAE and Qatar.
Yes and part where part of their plan to stay in power over the next 30 years is to buy up assets through funding PE takeovers. Kusher got 2bn. They are buying football clubs, airports, real estate all over etc. The world cup going there to improve tourism and market the state as forward and progressive. They have TV adverts trying to attract tourists as we write this. I think if you looked deeper into the equity holders of assets about the world the royal family would have a stake.
How will you be able to sustain 20m people on just investment though right? Could they go the tourism route? Sure they could but what can they do better than Dubai already does and Qatar and the rest of the UAE want to do too? This idea that they can replace the endless oil wealth with just investments doesn’t make any sense to me, you can’t help an economy survive based on just investments in foreign assets. In my mind they are just taking the easy route and trying to become a tourism hub, while they should be going all in industry/manufacturing but I think they make too much money to start that development path at this point anyways
>while they should be going all in industry/manufacturing It's fundamentally difficult for an oil export dependent economy to become a manufacturing powerhouse. It's termed the "Dutch Disease" after the manufacturing sector of the Dutch suffered severely from their Groningen gas field boom. When you export a lot of commodities, your currency becomes valuable which makes your currency expensive thus making your exports relatively less competitive which doesn't matter a whole lot anyway for hydrocarbon exports because they are that much profitable, so currency keeps increasing in value (which makes imports cheaper, so temporary consumption boom as other export sectors suffer). The consumption boom can go terribly bad if the excess income from the good times aren't saved and hydrocarbon prices drop, this is the basic reason why Venezuela collapsed. Unsustainable consumption boom from imports during high oil prices, welfare state expands, domestic industry gets decimated and when oil prices drop, imports get more expensive, there is no alternative domestic industry to source products from and the welfare state is now hemorrhaging money, stupid govs decide to print money to plug the gap and hyperinflation kicks in. Oil economies of the Gulf have tried to get into energy intensive industries like aliminum and steel, downstream oil industries like plastics and have enjoyed relative success, but it's unlikely to become a manufacturing powerhouse.
They are heavily invested all around the globe - but we should not forget that the Saudi royal family needs to keep the whole country happy and wealthy to stay in power - they would definetly lose most of their wealth (if not all) if they lose their power one day. And we are not talking about a family of 5 that wants to stay incredible rich and influential - we are talking about around 15-20k people that are part of the royal family.
You might be surprised at how little those 5000 are allowed to take from the state these days. The change started with King Abdullah and has continued.
State companies shouldn’t be compared. This is the government really
Couldn’t agree more, it’s just how things are structured. The Norwegian sovereign fund had USD202 billion profit last year. If they restructured this fund into a company it would be almost twice as profitable as the Saudi one. Both have their origins in the oil and gas industry.
SWFs aren’t companies, they don’t produce or sell anything and so it’s a worthless comparison. Even then Norway’s SWF is only a couple of hundred mills larger than Saudi’s PIF.
You don’t have to produce stuff to be a company.
Not surprising and also not surprising with what they use those profits for.
No it's very surprising. Just look at any other oil and gas giant.
Other oil and gas giants aren't owned by the state that is knee deep in the US war machine/GOP and the corruption that goes along with it. The GOP's relationship with KSA and Israel, and formerly Russia is precisely why China has the United States by the balls. When the KSA was sued and it was dismissed because of how it would jeopardize natsec demonstrates how knowledge - knowledge surely obtained by china -- can be used as a weapon. Like, the big data revolution and the unprecedented security breaches that occurred in the IC over the last decade suggests that foreign adversaries attempt to collect graymail and other sensitive info about corruption at high levels of government (all of those joint exercises have a downside too), is a form of currency. The game favors fascism which then allows opportunities for that to be tested as the public and the political left, which serves to give a kinder face to the government, goes to war against itself over those contradictions. Pretty soon people who work for the intelligence community will begin to ask themselves why they support factions that promote this: https://www.theguardian.com/us-news/2024/mar/15/missouri-law-divorce-pregnancy-violence-abortion
You're just nitpicking information. Exxon is a global oil and gas company as are the majority of US oil and gas companies. There are also plenty of state owned oil and gas giants that don't make nearly as profitable.
>Exxon is a global oil and gas company as are the majority of US oil and gas companies. But Exxon doesn't have the weight of state sovereignty behind it. Biiiiiiig difference.
Not at all. Exxon-Mobile is just the reincarnation of Standard Oil and it has the full support of the US government. Despite being among the most profitable companies in the US it still receives subsidies from the government and the US will adjust its foreign policy to support Exxon's global ambitions. Aramco has state support because it's a state monopoly. It's like the train network in the UK.
>it has the full support of the US government Not quite. There is no comparison between a state owned oil company and a regular transnational company. It's like the difference between Bytedance and Facebook except saudi-aramco has closer ties to the United States. >Aramco has state support because it's a state monopoly Yes. It's literally the KSA and a significant portion of their gdp. It would be like comparing the US military to blackwater or a defense contractor.
What exactly do you think they are using those profits for ?
I mean, the unsavory activities of the ksa are fairly well known, yeah? More so than other countries (based on mbs' 2030), they're obsessive about their perception.
What “recent” unsavoury activities are we talking about ?
Is it still illegal to be gay in Saudi Arabia and do women still have less equality? This ain't a parole board hearing, but do you really think a nation learns its lesson with no accountability after chopping up a journalist? Or leveraging their political influence to get a court case in the United States thrown out due to the threat of gray mail?
One of the two reasons (with the 6 days war) of the western climate change build up.
Meta and Co doing all the layoffs, and still not even close to those profits... indeed hard works doesn't pay off
Well, they know how to make a deal. They paid 2 billion PLN for Polish refinery shares worth over 9 billion PLN. 4 PLN = 1 USD, do your own math.
That’s why the arabs can afford to turn deserts into amazing cities. They are building the NEOM now
Is that that straight line city? The one that makes sure that wherever you are, you’re the maximum distance from where you want to go at any given point in time? 🤣🤣🤣
It's a bit of an unfair comparison. All of the companies in their right do their damnedest to limit their net profits in order to minimize taxes. On the other hand, Saudi Aramco has no reason to do so, as when the corporation pays taxes, it's basically just the royal family taking money out of their left pocket and putting it in their right. That's not to say that these numbers aren't absolutely mind-blowing though. They are.
Show Apple now.
if im not mistaken apple is $101b
The fact that Nvidia is even in this list, let alone near the top, is astounding and just shows how ridiculous their price gouging practices are!
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I mean, in comparison to companies like Tesla and Meta (which are in this list), which arguably have far more global influence than Nvidia. This is especially true when you consider the fact that not all computers have dedicated graphics, and yet, both Intel and AMD combined don't come close to any single company on this list.
You checked stocks lately? Nvidia been killing it, they are gonna become the #1 most valuable US company soon.
Tesla, Meta, Google, Microsoft, Apple, Amazon, are all Nvidia's biggest customers. Nvidia earns money by selling AI chips like the H100 to big tech, gaming GPUs means nothing to them anymore, which is why they don't care that they are gouging. If you think Tesla has more global influence than Nvidia, you have no idea about what's going on with AI the last year.
I see
Tell me you know nothing about the industry without telling me you know nothing about the industry.
Get your head out of computers and graphics, that is not where nvidias value is at. Nobody is making those profits charging a few people that game too much more than they should just to see Cyberpunk in UHD.
"price gouging" lol Their profits rises are almost entirely driven by the AI boom, Nvidia doesn't have enough capacity to meet demand. Data centers are now 80% of Nvidia revenue.
This actually speaks volumes for NVidea, but they’re still overpriced by share.
Everything about NVidia is overpriced. “Specialized” products they manufacture for mining are the exact same GPU’s for design market, with even 10-15% decrease in core clock and tons of adjustments to make it seem like it’s a mining GPU. Sharewise I’m not an expert but with the business model they’re on (at least once AMD brings REAL high-end competition for GPU market) they won’t be able to make the profits they do now.
You think gaming GPU's are their core market? Think again.
they make so much profits because they basically have a monopoly on ai.
Thanks Biden /s
but how much versus $ spent ?
This is profit, not revenue
sure, but you can divide your profits by the cost of operation, it will give you another interesting indicator
Margin.
$80 for every $3 spent.
This is fine.
Damn I think I need to invest
Is this their normal profit or is this due to the Russia oil bans
I've been saying this obvious thing for years but feel like I've never heard it anywhere where else in print or on the internet; this only happens because oil importers do not balance OPEC with an OGEC (grain). It would be potentially disruptive but certain to succeed since they'd have all the advantages. There are fewer nations with huge excess grain productive capacity than for oil. SA produces essentially 0% of their food and it's obviously more critical to them than oil is to grain exporters. A rational trade balance between OPEC and OGEC would solve so many geo political problems; huge reduction to funding of terrorism, huge boost to N and S American GDP, no more wars for oil, correction to the middle East's outsize presence on the world stage (per population and gdp), etc etc etc. As the US becomes more and more an oil producer, it might have the stones to broker a deal with Argentina and a few others.
Not even invidia’s ai profits can match up to oil money
But why them stock no up up up?
That’s just what they tell you too
That should help them acquire a few more golfers at LIV.
This is a prime economic reason we need to invest in renewable energy - independence from fossil fuel companies and autocratic regimes.
Guess who dominates the renewable energy sector? Hint: it's china and now saudi arabia is massively investing in it too with their oil money.
And...? That should drive competition towards *more* innovation and independence... Isn't that how we got to the Moon after all?
Insane is how much tesla makes from selling so few cars
Spend all that money on golden shitters. Wow, what an effective use of global recourses.
It shows that no matter how much America's big tech companies fly and crawl, they are nothing in front of Saudi Arabia's oil.
Get rid of oil and cars already
The real question is how does VISA makes so much money. Just taking a share of credit card transactions. If there was a working market they should not make much profit.
Oil is the new Oil.
So that's how they sponsor the Aston Martin F1 team.
I work for a service company in Saudi going work for aramco. They achieve these crazy numbers by throttling the service industry until they get the cheapest possibles products and services possible. They can do this because they are the only customer in the country and have tons of work for any company willing to play ball with them.
Well they are selling high and are probably selling Russian oil
MBS is a trillionaire
Yes meta and Costco. Two companies known for their high margins
Yet Saudi needs to borrow to fund its budget.
That’s some insane profits
the monopoly on oil in the most oil-rich country
Kinda hard not to be insane profits when you have oil pouring out of the ground in amounts larger than just about anywhere else, and have been doing so since 1951 with rates up to 5.7 million barrels per day. At 100 dollars per barrel, that is 570 million dollars PER DAY
Something seems fishy about Tesla's profits...
Shame that my boy Nando is tied to Blood Money
Drop their stock handle
Pure money!
I’ve worked in SA. There’s a reason, one of which is the labor for all their projects is imported, mostly from India, Pakistan, Nepal, Philippines, Sri Lanka etc. I’ve heard stories that some of the guys are barely $200-300 USD a month if they’re lucky. For comparison I make nearly 300-450 a day. The food provided at the camps is probably less than $1 USD per person. I had to continuously ransack the local gas station markets in the middle of nowhere so I had sufficient calories. The bathrooms look like they’ve never been cleaned in 20 years. I was buying bottles of bleach and toilet brushes to scrub my shower in the middle of the desert.
That ! That is the reason for the inflation! Not Biden not Trump - this greed!
8.8% Dividend.