Saudi Aramco Profits Fall Amid Lower Oil Prices And Declining Dividends

Saudi Aramco has announced a significant decline in dividends for 2025, marking almost a 30 per cent reduction from the $124 billion distributed last year to a total of $85.4 billion. This drop comes as the oil giant reported a 12 per cent fall in net income, from $121.3 billion in 2023 to $106.2 billion in 2024. Lower dividend payouts are set to strain Saudi Arabia’s finances, as the government directly owns 81.5 per cent of Aramco, while the sovereign wealth fund, the Public Investment Fund, holds another 16 per cent. Both are key beneficiaries of these payouts.

The decline in profits is attributed to subdued oil prices and reduced sales of crude oil. Aramco’s revenues slipped slightly to $436.6 billion in 2024 from $440.8 billion in the previous year. The company cited lower prices and volumes sold of crude oil, as well as weaker refined and chemical product prices, as primary causes for the revenue drop. However, increased volumes of refined and chemical products partially offset the decline.

Aramco’s dividend structure includes a base payment and a performance-linked component. The company disclosed that its base payout for the fourth quarter rose by 4.2 per cent compared to the previous year, totalling $21.1 billion. On the other hand, the performance-linked dividend was only $200 million, a sharp fall from $10.8 billion in the third quarter. The performance-linked payouts were initially introduced in response to record profits following surging oil prices during 2022 amid the Ukraine-Russia conflict.

The drop in Aramco’s results is likely to widen Saudi Arabia’s budget deficit. Weaker oil prices and increasing state expenditures on the ambitious Vision 2030 projects, such as the futuristic $1.5 trillion Neom development, add to the financial pressures. The Vision 2030 initiative aims to diversify Saudi Arabia’s economy away from its heavy reliance on oil revenues.

Oil prices have continued to decline, with Brent crude recently hitting a five-month low of $70.60 per barrel, extending a broader slump of more than 10 per cent year-to-date. Opec+ has decided to proceed with a plan to increase oil production from April, a move that surprised markets expecting further delays in reversing long-standing output cuts. This decision, compounded by ongoing fears of tariffs and slower global demand, has weighed on crude prices.

Aramco plans capital investments amounting to $52 billion to $58 billion this year, slightly less than the $53.3 billion recorded in 2024. As the oil markets return to more normalised conditions, analysts expect shareholder distributions and profitability to moderate over the year.