Saudi Aramco, a state-owned energy company in Saudi Arabia and the world’s most valuable company, has seen year-on-year profits almost quadruple in the second quarter of 2021.
The firm, which is also the world’s largest oil producer, attributed the soaring profits to the easing of Covid restrictions, increased rates of vaccinations, and stimulus measures by central governments. All of this has led to increased economic activity in the last few months and thus more demand for oil.
The increase in global demand is also helping to boost the price of oil, which in turn is good news for Saudi Aramco who can benefit from higher revenues.
Q1. Explain why the global demand for oil is increasing.
Q2. Explain the link between increasing demand and price.
Q3. With reference to price elasticity of demand, explain the likely impact of an increase in the price of oil on Saudi Aramco.
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