Saudi Aramco slashes spending as coronavirus erases oil demand growth

Saudi Aramco is slashing planned spending this year in the first sign that plunging demand and the oil-price war the kingdom unleashed are hitting home.

Capital expenditure will be between $25 billion and $30 billion in 2020 and spending plans for next year and beyond are being reviewed, Aramco said. The oil giant is lowering that range from the planned $35 billion to $40 billion announced in its IPO prospectus, and compares with $32.8 billion in 2019.

“That was the surprise,” Ahmed Hazem Maher, an analyst at EFG Hermes in Cairo, said of the spending cut. “They’re adding production in a low price environment so their cash flows could be impacted.” Cutting investment could help absorb some of the impact of the drop in oil prices, he said.