Low energy prices sting Aramco profits and squeeze Saudi development plans
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DUBAI, United Arab Emirates — DUBAI, United Arab Emirates (AP) — Saudi Arabia’s state-owned oil giant Aramco reported a $106.25 billion profit in 2024 on Tuesday, down 12% from the prior year as lower energy prices now squeeze the kingdom’s multi-trillion-dollar development plans.
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Already, Saudi’s de facto ruler Crown Prince Mohammed bin Salman has been digging a straight-line city in the desert for his $500 billion project at NEOM in Saudi Arabia’s western desert on the Red Sea. He also will need to build tens of billions of dollars’ worth of new stadiums and infrastructure ahead of the kingdom hosting the 2034 FIFA World Cup.
Meanwhile, he’s also pledged potentially $600 billion in U.S. investments to President Donald Trump to entice him to the kingdom on his first foreign trip as president. Saudi Arabia is also the possible venue for a meeting between Trump and Russian President Vladimir Putin over Moscow’s war on Ukraine.
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All that and OPEC+ moving toward increasing production means Saudi Arabia likely will need to take on new debt to fund the crown prince’s vast ambitions.
A filing on Riyadh’s Tadawul stock exchange showed Aramco, formally known as the Saudi Arabian Oil Co., had revenues of $436 billion in 2024. That compares to $440.88 billion in 2023.
Aramco reported a $121 billion annual profit in 2023, down from its 2022 record due to lower energy prices as well.
“The decrease was primarily driven by lower revenue and other income related to sales, higher operating costs, as well as lower finance and other income,” Aramco said in its filing.
Stock in Aramco traded just over $7 a share Tuesday, down from a high over the last year of $8.71. It has fallen over the past year as oil prices have dropped. Benchmark Brent crude traded Tuesday at around $70 a barrel, down over 15% over the last year
Aramco has a market value of $1.74 trillion, making it the world’s sixth-most valuable company behind Apple, Microsoft, NVIDIA, Amazon and Alphabet, which owns Google.
Aramco will pay dividends of $21.36 billion for the fourth quarter, which includes a far-smaller performance dividend of $220 million. The company expects to pay dividends of $85.4 billion this year, which is far lower and will further erode cash that Saudi Arabia’s monarchy can expect for the year.
Speaking to analysts on a call Tuesday afternoon, Aramco CEO and President Amin H. Nasser said the company had capacity to bring online 3 million barrels of additional crude oil a day. Each additional million barrels a day would mean $12 billion in revenue a year, he said.
“Global oil inventory levels have declined to around five-year lows, which means there are potential risks related to geopolitical instability and volatility,” Nasser said, suggesting crude prices could rise over time due to that. “Against this backdrop, Aramco remains ready for all scenarios.”
The Aramco results come as OPEC+, an alliance of the oil cartel and other energy-producing states, met online Monday and agreed to proceed with an increase in oil production starting in April. It’s the first oil production increase by the group since 2022 and likely will push down oil prices further. The increase slowly will add up to 2.2 million barrels of additional crude oil a day over the coming months.
“This is not the opening of the floodgates,” wrote Bjarne Schieldrop, the chief commodities analyst at SEB Research. “It is about lowering the oil price to a level that is acceptable for Putin, (Prince Mohammed), Trump, U.S. oil companies and the U.S. consumers.”
The OPEC+ decision follows criticism by Trump of the cartel as well.
Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude. For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance.
The Saudi government owns the vast majority of the firm’s shares. Saudi Aramco publicly listed a sliver of its worth back in late 2019 and has weighed offering more shares publicly.
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DUBAI, United Arab Emirates — DUBAI, United Arab Emirates (AP) — Saudi Arabia’s state-owned oil giant Aramco reported a $106.25 billion profit in 2024 on Tuesday, down 12% from the prior year as lower energy prices now squeeze the kingdom’s multi-trillion-dollar development plans.
Already, Saudi’s de facto ruler Crown Prince Mohammed bin Salman has been digging a straight-line city in the desert for his $500 billion project at NEOM in Saudi Arabia’s western desert on the Red Sea. He also will need to build tens of billions of dollars’ worth of new stadiums and infrastructure ahead of the kingdom hosting the 2034 FIFA World Cup.
Meanwhile, he’s also pledged potentially $600 billion in U.S. investments to President Donald Trump to entice him to the kingdom on his first foreign trip as president. Saudi Arabia is also the possible venue for a meeting between Trump and Russian President Vladimir Putin over Moscow’s war on Ukraine.
All that and OPEC+ moving toward increasing production means Saudi Arabia likely will need to take on new debt to fund the crown prince’s vast ambitions.
A filing on Riyadh’s Tadawul stock exchange showed Aramco, formally known as the Saudi Arabian Oil Co., had revenues of $436 billion in 2024. That compares to $440.88 billion in 2023.
Aramco reported a $121 billion annual profit in 2023, down from its 2022 record due to lower energy prices as well.
“The decrease was primarily driven by lower revenue and other income related to sales, higher operating costs, as well as lower finance and other income,” Aramco said in its filing.
Stock in Aramco traded just over $7 a share Tuesday, down from a high over the last year of $8.71. It has fallen over the past year as oil prices have dropped. Benchmark Brent crude traded Tuesday at around $70 a barrel, down over 15% over the last year
Aramco has a market value of $1.74 trillion, making it the world’s sixth-most valuable company behind Apple, Microsoft, NVIDIA, Amazon and Alphabet, which owns Google.
Aramco will pay dividends of $21.36 billion for the fourth quarter, which includes a far-smaller performance dividend of $220 million. The company expects to pay dividends of $85.4 billion this year, which is far lower and will further erode cash that Saudi Arabia’s monarchy can expect for the year.
Speaking to analysts on a call Tuesday afternoon, Aramco CEO and President Amin H. Nasser said the company had capacity to bring online 3 million barrels of additional crude oil a day. Each additional million barrels a day would mean $12 billion in revenue a year, he said.
“Global oil inventory levels have declined to around five-year lows, which means there are potential risks related to geopolitical instability and volatility,” Nasser said, suggesting crude prices could rise over time due to that. “Against this backdrop, Aramco remains ready for all scenarios.”
The Aramco results come as OPEC+, an alliance of the oil cartel and other energy-producing states, met online Monday and agreed to proceed with an increase in oil production starting in April. It’s the first oil production increase by the group since 2022 and likely will push down oil prices further. The increase slowly will add up to 2.2 million barrels of additional crude oil a day over the coming months.
“This is not the opening of the floodgates,” wrote Bjarne Schieldrop, the chief commodities analyst at SEB Research. “It is about lowering the oil price to a level that is acceptable for Putin, (Prince Mohammed), Trump, U.S. oil companies and the U.S. consumers.”
The OPEC+ decision follows criticism by Trump of the cartel as well.
Saudi Arabia’s vast oil resources, located close to the surface of its desert expanse, make it one of the world’s least expensive places to produce crude. For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance.
The Saudi government owns the vast majority of the firm’s shares. Saudi Aramco publicly listed a sliver of its worth back in late 2019 and has weighed offering more shares publicly.
