What's going on?

Saudi Aramco reported a 73% second-quarter drop in profit over the weekend, but the oil�s giant�s pressing ahead with its plan to pay billions in dividends anyway.

What does this mean?

Just like its international competitors, Aramco � the second-biggest company in the world � has been having a horrible time since coronavirus-induced lockdowns sent the price of and demand for oil into freefall. And while Saudi Arabia has propped up the slippery elixir�s price by convincing the group of oil-producing countries known as OPEC+ to curb production, that price is still down by a third this year.

But never one to let the little things get in the way, Aramco�s still planning to pay $75 billion in dividends this year. That�ll come as a relief for Saudi Arabia, which owns around 98% of Aramco and relies heavily on those payouts to cover its spending. But Aramco�s stress is far from over: it might have to sell more bonds if it wants to pay so much in dividends while profits keep falling.

Why should I care?

For markets: There�s no “we” in “oil”.
Unlike Aramco, oil giants BP, Shell, and Eni have all slashed their dividends. That could help explain why Aramco�s share price has been flat this year compared to most of its rivals, whose share prices have fallen by 30-40%. Still, at least they got some good news to kick off the week: positive Chinese factory data suggested oil demand is recovering, and oil�s price climbed higher on Monday.

The bigger picture: Not so big now.
Aramco has outperformed other energy companies this year, sure, but it hasn�t managed to hold on to its title as the world�s biggest company by market capitalization: that title was pinched last month by tech behemoth Apple. After rising almost 50% this year as part of a wider rally in tech stocks, Apple�s total market value is now almost $2 trillion… (tweet this)