BUSINESS Saudi Aramco Posts Record $161 Billion Profit for 2022 Oil prices boost Saudi Arabia’s national oil company as the kingdom seeks to showcase its foreign-policy ambitions Aramco said its annual profit rose by 46% last year, the latest major oil company to report a record annual profit for the year.PHOTO: TASNEEM ALSULTAN/BLOOMBERG NEWS By Summer Said Updated March 12, 2023 3:38 pm ET Saudi Arabia’s national oil company reported record annual profit of $161 billion for 2022, the largest ever by an energy firm, boosting the kingdom’s coffers as it looks to showcase its global business and foreign-policy ambitions and limit its heavy reliance on oil. Saudi Arabian Oil Co., 2222 1.23%increase; green up pointing triangle known as Aramco, said its yearly profit swelled by 46% in 2022 amid a rise in oil prices that has helped cement the kingdom’s dominance as the world’s most important oil producer and reinforce its geopolitical power at a time of shifting alliances in the Middle East. Aramco is one of the most valuable companies globally, with a market cap of $1.9 trillion, briefly capturing the top spot from Apple Inc. in May. Its performance has helped boost Saudi economic growth even as the U.S. and Europe worry about recession. The kingdom, the region’s biggest economy, recorded the fastest gross-domestic-product growth in the world last year among major economies, according to the International Monetary Fund, and 2023 is expected to be another profitable year for the world’s biggest oil exporter. On Sunday, the government announced the creation of a new national airline, Riyadh Air, part of an effort to reinvent Saudi Arabia as a global business and tourist hub that would compete with other Persian Gulf airlines. That followed an announcement on Friday of a surprise deal between Saudi Arabia and Iran to renew diplomatic relations that was mediated by China, as Beijing’s influence in the region increases. NEWSLETTER SIGN-UP What’s News Catch up on the headlines, understand the news and make better decisions, free in your inbox every day. Subscribed The oil boom has in part fueled Saudi Arabia’s willingness to pursue foreign policies and economic interests at odds with the U.S. Last year, Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries, rebuffed U.S. requests to pump more oil to help tame surging crude prices. Aramco is the latest big oil company to post a record annual profit last year, continuing a sharp turnaround after many companies were battered by a historic decline in energy demand during the pandemic that led some to idle rigs and slash production. Aramco and Exxon Mobil Corp. were notable outliers, arguing more forcefully than most that the industry needs to keep investing in fossil-fuel production. Aramco Chief Executive Amin Nasser said that the company spent $37.6 billion to expand its production capacity and it would significantly increase that amount in coming years. “Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real—including contributing to higher energy prices,” Mr. Nasser said. The company, majority-owned by the Saudi government, unexpectedly raised its dividend by 4% to $19.5 billion for the fourth quarter of last year, to be paid in the first quarter of 2023. The company’s board also recommended the distribution of bonus shares to eligible shareholders in the amount of one share for every 10 shares held. Aramco’s dividend commitment has been a key source of funding for the Saudi government and a bellwether for energy investors—a large, recurring payout the company promised to make in a bid to lure investors to its long-delayed initial public offering in 2019. Mr. Nasser said capital expenditures jumped 18% in 2022, as the company plans to increase its maximum sustainable capacity to 13 million barrels a day by 2027 from 12 million a day now. Aramco is aiming to spend $45 billion to $55 billion this year, significantly more than a total of $37.5 billion in capital expenditure from Exxon Mobil and Chevron Corp. Aramco’s results cement Saudi Arabia’s dominance as the world’s most important oil producer.PHOTO: MAXIM SHEMETOV/REUTERS Saudi Crown Prince Mohammed Bin Salman—who runs the kingdom’s day-to-day affairs for his elderly father, King Salman—has directed oil policy through OPEC to keep crude prices high for as long as possible, while his government tries to carry out policies that will protect the kingdom from boom-and-bust cycles. The crown prince is doubling down on an ambitious program, known as Vision 2030, to diversify the economy away from oil, aiming, for instance, to turn his once-cloistered kingdom into a global entertainment and tourism destination. Still, oil remains the engine of the economy. As global economies rebounded over the past year and Russia’s invasion of Ukraine scrambled energy markets, oil prices have soared. Last year, international benchmark Brent briefly reached $139 a barrel. Oil-and-gas companies were flooded with cash and drove tens of billions of dollars into share repurchases and dividends. With the West largely avoiding Russian oil and gas in the wake of sanctions imposed on Moscow over its invasion of Ukraine, Middle East petrostates now have a new market in Europe after years of focusing on sales to Asia. Aramco sees Europe as a market of the future because of shifting geopolitics and its move to replace all Russian energy imports by as early as mid-2024. Saudi Arabia was the fastest-growing of any major oil supplier to the European Union in the third quarter last year, with a 9.1% market share of imports of the commodity, compared with 5.1% on average last year, according to Eurostat. In recent months, Saudi Energy Minister Abdulaziz bin Salman has signaled that the kingdom is aiming to supply more crude to Europe. “We are engaged with so many governments,” Prince Abdulaziz said at an industry event in October. “Just to give you an example, Germany, Poland, the Czech Republic, Croatia, Romania and others.” High oil prices boosted Aramco’s free cash flow to $148.5 billion last year, compared with $107.5 billion in 2021. Its gearing ratio, a measure of debt to equity, decreased 7.9% last year, compared with 12% at the end of 2021. The Gulf has had oil booms before, when crude prices rose above $100 a barrel and monarchs invested billions of dollars in white-elephant projects that were never completed and handed out cash to citizens to buy support. When prices crashed in the past, Saudi Arabia introduced austerity measures. This boom is different, officials and economists say, as it comes as some Gulf countries move to liberalize their economies. The kingdom and other Gulf states have also used their windfall oil income to help crisis-racked neighbors such as Egypt, Pakistan and Turkey, doubling down on a diplomatic tool they have long used to build their geopolitical power. Write to Summer Said at summer.said@wsj.com