Saudi Aramco Reports Profit Decline and Dividend Reduction Amid Lower Oil Prices
Saudi Arabia’s state-owned oil giant, Aramco, has announced a 12% drop in net profit for 2024, alongside a significant cut to its world-leading dividend payouts.
The company attributed the decline to lower oil prices and increased global crude production, factors that have also put pressure on Saudi Arabia’s economic plans.
Aramco reported a net income of $106.2 billion in 2024, down from $121.3 billion in 2023. The company’s revenue also declined slightly, from $440.8 billion in 2023 to $436.6 billion in 2024.
The biggest shift, however, comes in Aramco’s dividend payments. The company announced that total payouts for 2025 are expected to be $85.4 billion, a sharp drop from $124.2 billion in 2024. This reduction marks a nearly 30% decline, impacting the Saudi government’s budget, which relies heavily on Aramco’s dividend revenue.
Aramco’s dividends consist of two parts: a base payment and a performance-linked payout. While the base dividend for the fourth quarter was increased to $21.1 billion, the performance-linked dividend fell drastically to just $200 million, compared to $10.8 billion in the third quarter.
1. Lower Oil Prices
The drop in profits was primarily driven by a decline in Aramco’s realized oil price, which fell to $80.2 per barrel in 2024, down from $83.6 in 2023. As global oil supply increased, prices remained under pressure, reducing Aramco’s earnings.
2. Global Market Trends and Increased Production
Rising global crude production, including from OPEC+ nations, has contributed to the decrease in oil prices. While this additional supply is intended to stabilize the market, it has also squeezed the revenue of major oil producers like Aramco.
3. Saudi Arabia’s Expanding Budget and Vision 2030 Projects
The dividend cut comes at a time when Saudi Arabia is funding massive infrastructure and economic diversification projects as part of Crown Prince Mohammed bin Salman’s Vision 2030 initiative. The government has committed to projects such as NEOM, a $500 billion futuristic city, as well as preparations for the 2034 FIFA World Cup, which require billions in investments.
While total borrowings at Aramco increased to $319.3 billion in 2024 (up from $290.1 billion in 2023), the company’s net debt decreased from $102.8 billion to $78 billion, reflecting a more cautious financial approach.
Aramco CEO Amin Nasser acknowledged that 2024 was “not a good year globally” for the oil industry but remained optimistic about the company’s future. He pointed to Aramco’s investments in downstream production and gas, which he expects will generate an additional $17–$20 billion in cash flow by 2030.
Nasser also highlighted that Aramco has the capacity to add 3 million barrels per day to the market in case of supply disruptions, a flexibility that could benefit the company if global demand rises.
The Saudi government owns 81.5% of Aramco, while its sovereign wealth fund controls an additional 16%. The company’s dividends have been a major source of funding for Saudi Arabia’s economy, helping offset budget deficits. Analysts estimate the deficit could widen to 4% of GDP in 2025, up from 2.8% in 2024.
Despite these challenges, Saudi Arabia remains a dominant force in global oil markets. Aramco’s ability to quickly adjust production levels and its investments in new energy sectors suggest that it will continue to play a crucial role in shaping the future of global energy markets.
With input from CNBC, Reuters, Bloomberg, and the Associated Press.
