The Research on the Impact of International Oil Price Fluctuation on the Performance of Saudi Oil Enterprises
Abstract
Oil is a commodity with highly volatile price.The change of oil price will not onlyaffect
the country's inflation, import and export trade and residents' consumption structure, but alsolead to the adjustment of oil industry chain structure and competition and cooperationrelationship. It also has an important impact on the output, sales volume, profit andfuturedevelopment strategy of petroleum industry enterprises.In particular, As the only oil companyin Saudi Arabia, the speed and strategy of Saudi Aramco's response to oil price fluctuationsare directly related to its own survival, the development of other industries and the country'seconomic stability.However, due to the severe international political situation and the impact
of COVID-19, international oil prices are falling off a cliff. Even the price of the 2020WTIMay futures contract plunged 305.97% and closed at -37.63 USD/barrel, falling into negativeterritory for the first time in history.Therefore, how to deal with the fluctuationsofinternational oil prices is crucial for Saudi Aramco.Based on the price theory, stakeholdertheory and enterprise core competitiveness theory, this paper analyzes the impact of oil
volatility on the performance of Saudi Aramco by using the data of crude oil price anditsannual fluctuation from 1987 to 2021.The differences between Saudi Aramco andotherinternational oil companies under the influence of international oil price fluctuations inrecent
five years are compared and analyzed.It clarifies the factors of Saudi Aramco's success.Theresults show that the oil price slump directly reduces the upstream profits of oil companies, increases the risk of asset impairment, and makes them adjust their development strategies, increase the investment in downstream business, and increase the investment in technological
innovation of upstream business.The increase in oil price will increase the profit of upstreambusiness, at the same time promote the cost transfer to the downstream business, increasetheinvestment in technological innovation and improve the cost structure of downstreambusiness.This paper makes a specific analysis of Saudi Aramco based on theoretical andpractical data, and obtains the transmission path of international oil price fluctuations toitsperformance.The empirical evidence and management suggestions are provided for theoil
industry enterprises to improve the risk resistance ability, enterprise performanceandprofitability of international oil price fluctuations.
Description
Keywords
oil price fluctuation
Citation
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