Saudi Aramco is preparing to implement spending cuts as it fights a price war against Russia during the coronavirus outbreak.
Saudi Aramco is the oil company for the Kingdom of Saudi Arabia. The company recently went public resulting in $29 billion worth of stock sold at the IPO. Last year, Saudi Aramco spent $32.8 billion. However, this year the oil giant expects to spend between $25 billion and $30 billion.
Despite cutting spending, Saudi Aramco also plans on expanding its production capacity to 13 million barrels a day, a 1 million barrel a day increase.
Saudi Aramco has remained resilient in the face of the coronavirus outbreak and has maintained its status as the most valuable oil company in the world. That value is reflected in the increased value of dividends that have been declared from the company. Saudi Aramco declared $73.2 billion in cash dividends in 2019 and expects to declare at minimum $75 billion in cash dividends this year.
The oil giant has also been engaging in a recently started price war with Russia. Due to the coronavirus outbreak, the Kingdom of Saudi Arabia had suggested cutting production with Russia in order to cushion a drop in prices. However, Russia and OPEC could not agree on a production cut, resulting in Saudi Arabia taking the lead in dropping prices with the hopes of gaining market share.