How long is the oil industry boom cycle?
Liu Chang
Oil giant Saudi Aramco recently released a report showing that the net profit in the second quarter was US$48.44 billion, and the net profit in the first half of the year was US$87.91 billion. Saudi Aramco won the "profit king" of global listed companies in the first half of the year.
Saudi Aramco owns the world's largest onshore and offshore oil fields.
As the economies of various countries gradually recover from the impact of the new crown pneumonia epidemic, oil demand has further recovered, and oil prices have continued to rise, and Saudi Aramco's profits have been rising.
After the company's net profit increased by more than 80% year-on-year in the first quarter, the second quarter once again refreshed the company's quarterly earnings record after its listing in 2019.
Saudi Aramco said the increase in profit in the second quarter was mainly due to higher crude oil prices and sales volumes, as well as higher margins in the refining, processing and marketing divisions.
At the same time, Saudi Aramco is also expanding its natural gas projects, including the design and construction of new gas plants and other facilities to meet energy needs.
Since the beginning of this year, due to the continuous influence of geopolitical conflicts, the global energy market has been disrupted, the prices of oil and natural gas have been continuously pushed up, and the international oil price has shown a volatile upward trend.
Brent crude oil futures hovered in the $100-$120 range for a while, leading to soaring refining margins, coupled with companies further cost control, in addition to Saudi Aramco, several other oil majors such as Exxon Mobil, Shell , Chevron and other second-quarter financial reports are very strong.
Exxon Mobil's second-quarter net profit reached $17.85 billion, an increase of more than three times the previous quarter.
Shell's second-quarter net profit reached $11.47 billion, a record high for the company.
Chevron's second-quarter net profit was US$11.622 billion, which also achieved the most dazzling report card ever.
In short, the word "record" appeared in almost every oil major's second-quarter earnings report this year.
Industry insiders call the second quarter a blowout moment for the oil industry. However, high energy prices have exacerbated inflation, putting pressure on consumers and raising the risk of a recession. It remains to be seen whether the oil industry's business cycle can last.
On the one hand, oil companies say that as supply and demand will remain tight, energy prices will continue to rise sharply in the coming period.
On the other hand, industry insiders warned that the risk of economic recession is piling up, global oil demand may be suppressed, oil majors will face weak demand, and the prosperity of the oil industry will peak in the second or third quarter, and then decline slightly.
Although it seems that the earnings of many oil giants in the second quarter exceeded market expectations, with the gradual advancement of energy transformation, it is no longer feasible for energy giants to rely entirely on traditional fossil energy businesses, and the future development of the oil industry will still face huge challenges.
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