Saudi Arabia's state-backed oil giant Aramco announced on Sunday that its profit declined 44.4% to $49bn (£35.3bn).
This was down from $88.2bn in 2019 and $111.1bn in 2018. There was a 30.7% decline in oil revenues last year for the Saudi government.
Sales at the world’s biggest oil company were hit by a decline in energy demand amid the coronavirus pandemic and lower crude (CL=F) oil prices.
Aramco, the world’s largest crude producer lowered its guidance for spending to around $35bn from a range of $40bn to $45bn previously.
It also expects to cut capital expenditure to $27bn compared to $32.8bn the year before.
Despite the downgrade, the company's $75bn dividend for last year survived the oil rout, signalling a pickup in oil demand.
Aramco's annual report said that it produced the equivalent of 9.2 million barrels per day of crude oil in 2020
"The dividend is in line with expectations, which is what holders of Aramco will care about most, but lower capex implies the company does not expect high oil prices to last for the long-term," Hasnain Malik, head of equity research at Tellimer, said.
It comes are the COVID-19 pandemic sent the price of oil crashing to all-time lows as people stopped moving around the world to stem the spread of infections.
Earlier this month, Brent (BZ=F) jumped to $71 a barrel after one of Saudi Arabia’s key oil facilities came under missile and drone attack from hostile forces in Yemen.
The storage tank that was targeted at Ras Tanura in the country’s Gulf coast is the world’s largest crude terminal. It is capable of exporting roughly 6.5 million barrels a day, representing nearly 7% of oil demand.
Overall, the international oil benchmark, Brent crude is up 80% since the end of October last year, this is driven by optimism over the vaccine rollouts and production cuts by some of the world's largest exporters, such as Russia.
Last week, IEA boosted the number of oil barrels to 100,000-barrels-per-day (bpd) in its monthly report. This is the amount by which it expects global oil demand to rebound in this year, which is 5.5 million bpd.
The Paris-based body expects American crude production to fall by 180,000 barrels a day. It expects demand to only be 1.4 million barrels a day short of pre-pandemic levels, in the final quarter of 2021.
The Organisation of Petroleum Exporting Countries (OPEC) and its allies also decided this month to mostly maintain their supply cuts for April.
An increase of 500,000 barrels a day was widely expected, however, Saudi Arabia agreed to maintain a voluntary 1 million barrels per day cut despite calls from some smaller producers to allow a modest loosening.
Russia was allowed a 130,000 barrel a day increase in quota and Kazakhstan 20,000.
The group is awaiting a more solid recovery in demand from the coronavirus pandemic despite a recent rally in oil prices in the past two months.
The next OPEC+ meeting is on 1 April.
Earlier in March, Goldman Sachs (GS) raised its forecast for Brent crude by $5 to $75 per barrel in the second quarter and $80 in the third quarter.
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