Saudi Arabia’s state-owned oil giant Aramco reported a $106.25bn profit in 2024, down 12% from the prior year as lower energy prices now squeeze the kingdom’s multi-trillion-dollar development plans
Saudi Arabia’s state-owned oil giant, Aramco, has announced a profit of $106.25bn in 2024 , marking a 12% decrease from the previous year due to falling energy prices that are now putting pressure on the kingdom’s multi-trillion-dollar development plans.
The de facto ruler of Saudi, Crown Prince Mohammed bin Salman, has already started work on the $500bn project to construct the linear city of NEOM in Saudi Arabia’s western desert along the Red Sea. He also needs to build new stadiums and infrastructure worth tens of billions of dollars in preparation for the kingdom hosting the 2034 FIFA World Cup. In addition, he has pledged potentially $600bn in investments in the US to attract President Donald Trump to the kingdom on his first foreign trip as president.
Saudi Arabia is also being considered as the venue for a meeting between Trump and Russian President Vladimir Putin regarding Moscow’s war on Ukraine. With OPEC+ leaning towards increasing production, Saudi Arabia will likely need to take on new debt to fund the crown prince’s vast ambitions.
A filing on Riyadh’s Tadawul stock exchange revealed that Aramco, officially known as the Saudi Arabian Oil Co., had revenues of $436bn in 2024, compared to $440.88bn in 2023. Aramco reported an annual profit of $121bn in 2023, which was down from its 2022 record due to lower energy prices as well.
Aramco has reported a slump in profits, pointing out: “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,” according to their latest filing. The company’s shares dipped to just over $7 on Tuesday, marking a noticeable decline from last year’s peak of $8.71.
The drop comes amid falling oil prices, with Benchmark Brent crude trading at around $70 a barrel, over 15% down on the year. Despite being the world’s sixth-most valuable firm with a market cap of $1.74tn, Aramco is set to pay out smaller dividends—$21.36 billion for Q4, coupled with a performance dividend of just $220m.
With anticipated dividends totalling $85.4bn for the current year, Saudi Arabia’s ruling family faces a squeeze on its financial expectations. Addressing Wall Street analysts in a briefing, Aramco’s chief Amin H. Nasser highlighted that the company can pump an additional 3 million barrels per day if needed—a boost that could spell an annual increase in revenue by $12bn.
Nasser also raised concerns about global supply, noting: “Global oil inventory levels have declined to around five-year lows, which means there are potential risks related to geopolitical instability and volatility. Against this backdrop, Aramco remains ready for all scenarios.”
The Aramco financial update coincides with OPEC+, a coalition of oil-producing nations, who convened online on Monday and agreed to initiate an increase in oil production starting in April. This marks the first hike in oil output by the group since 2022 and is expected to further drive down oil prices.
The planned increment will gradually introduce an extra 2.2 million barrels of crude oil per day over the next few months. “This is not the opening of the floodgates,” penned Bjarne Schieldrop, chief commodities analyst at SEB Research. “It is about lowering the oil price to a level that is acceptable for Putin, (Prince Mohammed), Trump, US. oil companies and the US consumers.”
The OPEC+ resolution comes after President Trump also lambasted the cartel. Industry insiders predict that oil prices could plummet to the $60 range, which would strain Saudi Arabia’s budget even more.
“The news that Aramco … will cut its dividend payout this year will put a dent in the kingdom’s public finances and, together with a likely decline in the state’s oil revenues, may ratchet up pressure for more fiscal tightening,” noted James Swanston, senior Middle East and North Africa economist at Capital Economics.
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 $40bn 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.