Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information on our utilization of financial instruments and an analysis of the sensitivity of these instruments to selected changes in market rates and prices is included in our 2023 Form 10-K.

Our net financial instrument position increased from a liability of $8,990.8 at 30 September 2023 to a liability of $11,662.0 at 31 December 2023. The increase was primarily due to the issuance of commercial paper as well as additional borrowings under the project financing associated with the NEOM Green Hydrogen Project as discussed in Note 3, Variable Interest Entities, to the consolidated financial statements. As of 31 December 2023, we classified the outstanding commercial paper, which totaled approximately $1.3 billion, as long-term debt as we have the ability to refinance the debt under our $2.75 billion revolving credit agreement maturing in 2026. Our current intent is to refinance this debt via the U.S. public debt market.

Interest Rate Risk

Our debt portfolio as of 31 December 2023, including the effect of currency and interest rate swap agreements, was composed of 73% fixed-rate debt and 27% variable-rate debt. Our debt portfolio as of 30 September 2023, including the effect of currency and interest rate swap agreements, was composed of 80% fixed-rate debt and 20% variable-rate debt. The increase in variable-rate debt was primarily driven by commercial paper of approximately $1.3 billion that was classified as long-term debt as of 31 December 2023.

The sensitivity analysis related to the interest rate risk on the fixed portion of our debt portfolio assumes an instantaneous 100 bp parallel move in interest rates from the level at 31 December 2023, with all other variables held constant. A 100 bp increase in market interest rates would result in a decrease of $879 and $728 in the net liability position of financial instruments at 31 December 2023 and 30 September 2023, respectively. A 100 bp decrease in market interest rates would result in an increase of $1,030 and $845 in the net liability position of financial instruments at 31 December 2023 and 30 September 2023, respectively.

Based on the variable-rate debt included in our debt portfolio, including the interest rate swap agreements, a 100 bp increase in interest rates would result in an additional $33 and $21 of interest incurred per year at 31 December 2023 and 30 September 2023, respectively. A 100 bp decline in interest rates would lower interest incurred by $33 and $21 per year at 31 December 2023 and 30 September 2023, respectively.

Foreign Currency Exchange Rate Risk

The sensitivity analysis related to foreign currency exchange rates assumes an instantaneous 10% change in the foreign currency exchange rates from their levels at 31 December 2023, with all other variables held constant. A 10% strengthening or weakening of the functional currency of an entity versus all other currencies would result in a decrease or increase, respectively, of $369 and $308 in the net liability position of financial instruments at 31 December 2023 and 30 September 2023, respectively.