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Saudi Aramco, the world’s largest oil company, said on Sunday that its quarterly earnings plunged more than 73 percent compared to a year ago, as lockdowns imposed to curb the coronavirus pandemic drastically cut the demand for oil and slammed prices.
Despite the steep fall in earnings, to $6.6 billion from $24.7 billion, the company said it would continue paying a quarterly dividend of $18.75 billion, almost three times its cash flow. Aramco is locked into paying such a large amount — $75 billion a year — because of commitments made in the run-up to its initial public offering last year.
Nearly all of the dividend money will go to the Saudi government, which owns more than 98 percent of the company.
Continuing to pay such a large dividend distinguishes Aramco from other oil giants, like BP and Royal Dutch Shell, which have recently cut their payouts to preserve capital in difficult times.
“While other oil companies are taking the opportunity to reset the dividend, Aramco are somewhat locked into the IPO commitments,” said Neil Beveridge, an analyst at Bernstein, a market research firm. Mr. Beveridge estimated that Aramco is likely borrowing around $12 billion to pay the dividend.
Recently, a surging Apple dethroned Saudi Aramco as the world’s most valuable company. Apple now has a market capitalization of about $1.9 trillion compared to about $1.76 trillion for the Saudi company.
Stocks were modestly higher on Monday as European indexes weathered the latest escalation of tensions between the United States and China and continued uncertainty in Washington over support for businesses and unemployed workers during the pandemic.
Most European indexes were about 0.5 percent higher in morning trading after a mixed day in Asian markets. Futures on Wall Street pointed to a gain when trading begins later in the day.
Oil futures were having a good day, with Brent crude and West Texas Intermediate both more than 1.5 percent higher. European energy companies were also gaining, providing some lift for the major indexes, with shares in Royal Dutch Shell and BP both up about 2 percent. Ten-year Treasury notes were gaining in price, while gold was slightly lower, at 2,032 an ounce.
The drama between Washington and Beijing continued on Monday as the United States sent its highest-level delegation to visit Taiwan since severing official ties with the island in 1979. China, which claims the territory, said on Monday that it would impose sanctions on 11 Americans, including several senators — an apparent response to Friday’s announcement by the Trump administration of sanctions on Carrie Lam, Hong Kong’s chief executive, and 10 others for their roles in cracking down on political dissent.
In the U.S., negotiations between the White House and congressional Democrats over coronavirus relief remain at an impasse. President Trump’s attempt to circumvent Congress with legally questionable executive actions resulted in confusion and uncertainty on Sunday for tens of millions of unemployed Americans and countless businesses whose benefits have lapsed.
President Trump, in announcing his executive measures on Saturday, said he was bypassing Congress to deliver emergency pandemic aid to needy Americans. But his directives are rife with so much complexity and legal murkiness that they’re unlikely, in most cases, to bring fast relief — if any.
Because Congress controls federal spending, at least some of Mr. Trump’s actions will almost certainly be challenged in court. They could also quickly become moot if congressional leaders reach an agreement and pass their own relief package. Speaker Nancy Pelosi of California on Sunday dismissed Mr. Trump’s actions as unconstitutional and said a compromise deal was still needed. Treasury Secretary Steven Mnuchin said he would be open to further talks with Democratic leaders: “Anytime they have a new proposal, I’m willing to listen.”
Mr. Trump’s executive steps on Saturday focused on four areas: extending supplemental unemployment benefits, suspending some payroll taxes, extending relief for student loan borrowers and offering eviction relief. Of the four, the student loan memorandum seems likely to be the least controversial and the easiest to carry out.
But his various executive actions did not include several forms of relief that have been part of recent negotiations, including lump-sum payments to citizens and additional relief for small businesses.