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An offshore drilling platform stands in shallow waters at the Manifa offshore oilfield, operated by Saudi Aramco, in Manifa, Saudi Arabia, on Wednesday, Oct. 3, 2018.

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Saudi Arabia has a superpower. Not only is it the largest exporter of crude oil in the world; its production costs for oil projects are also the lowest in the world, at around just $10 per barrel. When around 75% of your fiscal revenue comes from oil, that’s a big deal.

And for a time, its fiscal breakeven oil price — what it needed a barrel of crude to cost in order to balance its budget — was fairly comfortable, too.

That’s changing as the kingdom embarks on huge spending projects as part of Vision 2030, which aims to modernize its economy and diversify its revenue sources away from oil. With each passing year, that projected breakeven oil price gets higher, and the kingdom’s deficit widens.

In May of 2023 the International Monetary Fund forecast the kingdom’s breakeven oil price at $80.90 per barrel, which moved it back into a fiscal deficit following its first surplus in nearly a decade. The Fund’s latest forecast, in April, put that figure at $96.20 for 2024; a roughly 19% increase on the year before, and about 32% higher than the current price of a barrel of Brent crude, which is trading at around $73 as of Wednesday afternoon.

Riyadh, Saudi Arabia.

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“At least until 2030, Saudi will have massive budgetary needs due to the need to demonstrate some significant outcome in key Vision 2030 projects and to prepare for and host big sporting and cultural events” like the World Cup 2034 and Expo 2030, said Li-Chen Sim, a non-resident scholar at the Washington-based Middle East Institute.

“All this amidst expected growth in oil supply from the U.S., Guyana, Brazil, Canada, and even the UAE and possible anemic oil consumption growth in China, the Kingdom’s largest oil customer, means that the Kingdom’s fiscal breakeven price is likely to rise perhaps to around $100.”

All that, she adds, does not include the domestic spending requirements of the kingdom’s mammoth sovereign wealth fund, the Public Investment Fund, which is behind multi-trillion dollar megaprojects like NEOM. A Bloomberg forecast cited by Nomura Asset Management put this year’s breakeven price, including PIF spending, at $112 per barrel.

“Saudi Arabia is wealthy and government spending has climbed rapidly over the past decade but it has fiscal parameters within which it must operate just like every other country,” a Nomura report on Arabian markets published Sept. 2 read.

Important economic indicators “like oil production and prices, are now flashing warning signs,” it added. “A global slowdown amid supply uncertainties may hamper prospects for hydrocarbon economies.”

Does the breakeven oil price actually matter?

But wait — fiscal breakeven prices are not always as important as people think they are, some economists and market analysts argue. And for Saudi Arabia, a range of options exist to manage deficits and less-than-ideal oil prices.

“The reality is that countries run deficits all the time, and therefore the idea Saudi Arabia needs $112 oil, or whatever the number is, to me doesn’t provide a true representation of what’s going on,” one energy analyst who focuses on the kingdom told CNBC.

“For Saudi Arabia, they have a lot of capacity to take on more debt if they wanted to … it’s not an issue for them to run a small deficit,” the analyst said, speaking anonymously due to professional restrictions on speaking to the press.

Saudi Arabia's non-oil growth is proving to be 'robust,' economist says

The kingdom also has robust foreign currency reserves, which grew to a 20-month high of $452.8 billion in July, and has been successfully issuing bonds, tapping debt markets for $12 billion so far this year. Oil revenue should increase in 2025 when the OPEC+ production cuts, the majority of which were taken by Saudi Arabia, expire, according to energy analysts.

“From that perspective, they’re also starting from a relatively strong position,” the source said.

Saudi Arabia’s public debt has grown from around 3% of its GDP in the 2010s to 24% today — that’s a massive increment, Sim said. But by international standards, it’s still low. Average public debt in EU countries, for instance, averages 82%. In the U.S. in 2023, that figure was 123%.

Watch CNBC's interview with Saudi Arabia's assistant minister of investment

Its relatively low debt level and high credit rating makes it easier for Saudi Arabia to take on more debt as it needs to. The kingdom has also rolled out a series of reforms to boost and de-risk foreign investment and diversify revenue streams. While the country’s economy has contracted for the last consecutive four quarters, non-oil economic activity grew 4.4% in the second quarter year-on-year, up 3.4% from the prior quarter.

“The good news is that the economy is progressing along its diversification track and has already absorbed large reductions in subsidies and higher VAT while generating a huge number of jobs,” the Nomura report said.

While the kingdom “still lacks the quantum of foreign direct investments desired,” it wrote, “the newly approved investment law should bring it closer to achieving its goal of building a substantially bigger non-oil sector.”

Risks remain, however — primarily if oil demand continues to be soft in major consuming countries and crude supply in non-OPEC+ countries continue to grow, Sim said. And those risks are entirely out of Saudi Arabia’s control.

“With regard to the first point, the biggest danger is a possible tit-for-tat tariff war between China and the US or Europe,” Sim said. This “could result in slower global economic growth and hence a reduced demand for oil.”

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Venmo revenue grows 20%, with debit card payment volume soaring

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Venmo revenue grows 20%, with debit card payment volume soaring

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Venmo, long a centerpiece of PayPal‘s growth story but often criticized for its lack of monetization, is becoming a bigger contributor to the business.

PayPal said Tuesday in its first-quarter earnings release that revenue at Venmo increased 20% year-over-year in the first quarter, though the company didn’t provide a dollar figure. PayPal acquired Venmo in 2013 through the acquisition of parent company Braintree.

While it’s long been a popular consumer service for sending money to friends, Venmo’s ability to drive meaningful revenue has been a major question mark for investors, especially as competition from rivals like Zelle and Square Cash has intensified.

Venmo’s total payment volume rose 10% from a year earlier, but revenue grew twice as fast, reflecting the business opportunity. Venmo only gets revenue from specific products like Pay with Venmo at online checkout, Venmo debit cards, and instant transfers, but not from peer-to-peer payments.

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Ahead of the earnings report, Jefferies analysts noted that Venmo revenue growth appeared to be “accelerating sharply” and flagged its rising contribution to branded checkout as a key area to watch. Compass Point analysts similarly said that while competition from Zelle and Square Cash remains fierce, Venmo’s traction with debit cards and online checkout could “open up new monetization avenues” if adoption trends continue.

The company added nearly 2 million first-time PayPal and Venmo debit card users during the quarter, and total debit card payment volume across PayPal and Venmo climbed more than 60%. Meanwhile, Pay with Venmo transaction volume surged 50% year over year, and Venmo debit card monthly active users grew about 40%.

PayPal reported better-than-expected earnings for the quarter but missed on revenue. The company reaffirmed its full-year guidance, citing macroeconomic uncertainty.

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PayPal reports first-quarter earnings beat, maintains forecast

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PayPal reports first-quarter earnings beat, maintains forecast

CEO of PayPal Alex Chriss speaks during the Semafor 2025 World Economy Summit at Conrad Washington on April 24, 2025 in Washington, DC.

Alex Wong | Getty Images

PayPal reported better-than-expected earnings for the first quarter, but the company missed on revenue and reaffirmed its guidance for 2025 due to macro uncertainty. The stock fell about 2% in pre-market trading.

Here’s how the company did compared with Wall Street estimates, based on a survey of analysts by LSEG:

  • Earnings per share: $1.33, adjusted vs. $1.16 expected
  • Revenue: $7.79 billion vs. $7.85 billion expected

While sales increased just 1% from $7.7 billion a year earlier, PayPal said the results reflect a strategy to prioritize profitability over volume, rolling off lower-margin revenue streams.

Transaction margin dollars, the company’s key measure of profitability, grew 7% to $3.7 billion, marking the company’s fifth consecutive quarter of profitable growth under CEO Alex Chriss.

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PayPal shares are down 24% this year, while the Nasdaq has dropped 10%

Total payment volume, an indication of how digital payments are faring in the broader economy, missed estimates, coming in at $417.2 billion, versus the nearly $418 billion analysts projected. The number of active accounts rose 2% from a year earlier to 436 million.

Venmo revenue rose 20% year over year, though the company didn’t provide a dollar figure. Total payment volume for Venmo increased 10% to $75.9 billion. Pay with Venmo transaction volume climbed 50% in the quarter and Venmo debit card monthly active users increased by about 40%.

Chriss has focused on better monetizing key acquisitions like Braintree and Venmo. DoorDash, Starbucks and Ticketmaster are among businesses now accepting Venmo as one way that consumers can pay.

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Ahead of PayPal’s earnings report, some analysts had struck a cautious tone despite the company’s focus on margin expansion. Morgan Stanley analysts warned in a note on Monday that investor sentiment remained bearish due to the potential impact of tariffs, competitive pressure from Apple and Shopify, and the risk of a long-term slowdown in branded checkout growth.

Jefferies analysts highlighted PayPal’s China cross-border exposure as an emerging risk tied to potential new tariffs and changes to the de minimis exemption.

For the second quarter, PayPal issued better-than-expected guidance, forecasting adjusted earnings per share of $1.29 to $1.31, above the average analyst estimate of $1.21. Transaction margin dollars will increase 4% to 5% to between $3.75 billion and $3.8 billion, the company said.

However, for the full year, PayPal chose to reaffirm its guidance, citing “global macroeconomic uncertainty.” The company expects earnings per share of $4.95 to $5.10 for the year and free cash flow in the range of $6 billion to $7 billion.

PayPal shares are down 24% this year, while the Nasdaq has dropped 10%.

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BP profit falls sharply but CEO says oil major ‘off to a great start’ in strategy reset

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BP profit falls sharply but CEO says oil major 'off to a great start' in strategy reset

British oil and gasoline company BP (British Petroleum) signage is being pictured in Warsaw, Poland, on July 29, 2024.

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British oil giant BP on Tuesday posted slightly weaker-than-expected first-quarter net profit, following a recent strategic reset and a slump in crude prices.

The beleaguered oil and gas major posted underlying replacement cost profit, used as a proxy for net profit, of $1.38 billion for the first three months of the year. That missed analyst expectations of $1.6 billion, according to an LSEG-compiled consensus.

BP’s net profit had hit $2.7 billion a year earlier and $1.2 billion in the final three months of 2024.

The results come as the energy major faces fresh pressure from activist investors less than two months after announcing a strategic reset.

Seeking to rebuild investor confidence, BP in February pledged to slash renewable spending and boost annual expenditure on its core business of oil and gas.

BP CEO Murray Auchincloss told CNBC’s “Squawk Box Europe” on Tuesday that the firm was “off to a great start” in delivering on its strategic reset.

BP CEO Murray Auchincloss discusses first-quarter results

“We had a great operational quarter. We had our highest upstream operating efficiency in history. Our refineries in the first quarter ran at the best they’ve run in 24 years. We had six exploration discoveries in a row, which is really unusual and we started out three major projects,” Auchincloss said.

For the first quarter, BP announced a dividend per ordinary share of 8 cents and a share buyback of $750 million.

Net debt rose to $26.97 billion in the January-March period, up from $22.99 billion at the end of the fourth quarter. BP had previously warned of lower reported upstream production and higher net debt in the first quarter, when compared to the final three months of last year.

Shares of BP fell 3.3% on Tuesday morning. The firm is down roughly 8% year-to-date.

Activist pressure

BP’s green strategy U-turn does not appear to have gone far enough for the likes of activist investor Elliott Management, which went public last week with a stake of more than 5% in the London-listed firm.

The disclosure makes the U.S. hedge fund BP’s second-largest shareholder after BlackRock, the world’s largest asset manager, according to LSEG data.

Elliott was first reported to have assumed a position in the oil and gas company back in February, driving a share price rally amid expectations that its involvement could pressure BP to shift gears back toward its oil and gas businesses.

BP’s Auchincloss declined to comment on interactions with investors when asked whether the firm was under pressure from the likes of Elliott to go beyond the plans announced in its February pivot.

Notably, BP suffered a shareholder rebellion at its annual general meeting earlier this month. Almost a quarter (24.3%) of investors voted against the re-election of outgoing Chair Helge Lund, a symbolic result that reflected a sense of deep frustration among the firm’s shareholders.

Mark van Baal, founder of Dutch activist investor Follow This, told CNBC last week that he hoped the shareholder revolt means Amanda Blanc, who is leading the process to find Lund’s successor, will look for a new chair who is “climate competent” and “will not respond to short-term activists so quickly.”

Lund is expected to step down from his role next year.

Takeover candidate

BP’s underperformance relative to industry peers such as Exxon Mobil, Chevron and Shell has thrust the energy major into the spotlight as a prime takeover candidate. Energy analysts have questioned, however, whether any of the likeliest suitors will rise to the occasion.

BP’s Auchincloss on Tuesday said that he wouldn’t speculate on whether the company is a takeover target, but confirmed the oil major had not asked for any sort of protection from the British government.

“What I will say is we’re a strong, independent company and we’ve got sector-leading growth. And if we can deliver the sector-leading growth, and the first quarter is a fantastic example of that, then I have no concerns. I think we’re going to do great,” Auchincloss said.

Murray Auchincloss, chief executive officer of BP, during the “CERAWeek by S&P Global” conference in Houston, Texas, on March 11, 2025.

Bloomberg | Bloomberg | Getty Images

Oil prices have fallen in recent months on demand fears. International benchmark Brent crude futures with June delivery traded at $65.19 per barrel on Tuesday morning, down more than 1% for the session. That’s lower from around $84 per barrel a year ago.

Asked whether weaker crude prices could put the some of the firm’s reset plans in jeopardy, Auchincloss said, “Not really. We have a balance of products that we think about that generate revenue for us. So, oil, natural gas and refined products as well.”

— CNBC’s Ruxandra Iordache contributed to this report.

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