Saudi companies warn that Aramco fuel hike could curb profits

Saudi companies warn that Aramco fuel hike could curb profits

Dozens of Saudi companies said their profits could take a hit this year as production costs rise after the state energy group Saudi Aramco will notify you that it will drastically increase raw material and fuel prices.

Companies including Nama Chemicals 2210.SE and Saudi Ceramic 2040.SE said in regulatory filings that Saudi Aramco 2222.SE notified them on Wednesday that, effective Jan. 1, the energy giant would increase prices of retail diesel by 2024 by 53%, to US$0.3067 per liter, its third increase since 2016.

Qassim Cement 3040.SE, Saudi Aramco Base Oil Co. 2223.SE and Rabigh Refining and Petrochemical 2380.SE are also among the companies that issued regulatory documents late Wednesday and on Thursday saying they would be affected by price increases.

The prices of natural gas and other fuels will also rise, but the companies did not give details about the amount.

The companies said they could begin to notice the impact in the first quarter and They are looking for ways to improve efficiency to offset rising costs.

Saudi Aramco did not immediately respond to a request for comment when contacted by Reuters on Thursday.

Saudi Arabia’s Tadawul stock index fell 1.6% in early trading on Thursday, weighed down by petrochemical and cement values.

The price increases are part of domestic fuel price reforms initiated by the Saudi government. The reforms began in 2016 in response to lower crude oil prices at the time and saw gasoline, diesel and electricity prices They soared by as much as 80% as the kingdom sought to phase out energy subsidies.