In 2024, Saudi Arabia’s oil titan, Aramco, announced a substantial profit of $106.25 billion, reflecting a 12% decline compared to the previous year, impacted by falling energy prices. This financial squeeze affects the Kingdom’s extensive multi-trillion-dollar developmental initiatives.
Crown Prince Mohammed bin Salman, Saudi Arabia’s de facto leader, is ambitiously pursuing his grand vision, including the construction of a linear city in the desert as part of the $500 billion NEOM project. Additional financial commitments include massive investments in new stadiums and infrastructure in preparation for hosting the 2034 FIFA World Cup.
Moreover, the Crown Prince has aimed to invest a potentially significant $600 billion in the U.S., attracting global interest, including a potential high-profile meeting between former President Donald Trump and Russian President Vladimir Putin, discussing various international concerns.
As OPEC+ plans to boost oil production, Saudi Arabia might have to incur new debt to support these ambitious schemes. Aramco’s 2024 earnings were largely affected by reduced oil prices. According to information disclosed on the Riyadh Tadawul stock exchange, Aramco’s revenues stood at $436 billion, slightly lower than the $440.88 billion reported the previous year.
In 2023, Aramco recorded a decline from its 2022 profit peak, with a $121 billion annual profit attributed again to waning energy prices. Aramco noted the reduction was mainly due to decreased revenue, heightened operational costs, and reduced financial and other income.
The company’s stock value hovered around $7, having decreased from a peak of $8.71 within the past year, coinciding with a drop in oil prices. Currently, Brent crude oil is trading at approximately $70 per barrel, marking a 15% decrease over the past year.
Valued at $1.74 trillion, Aramco ranks as the world’s sixth-most valuable firm, following Apple, Microsoft, NVIDIA, Amazon, and Google’s parent company, Alphabet. Aramco plans to disburse $21.36 billion in dividends for the fourth quarter of 2024, with a modest performance dividend of $220 million. The projected total dividends for the year stand at $85.4 billion, significantly lower amounts potentially impacting the Saudi monarchy’s financial resources for the coming year.
During a conference call with analysts, Aramco’s CEO and President Amin H. Nasser announced the company’s capability to ramp up production by an additional 3 million barrels per day, with each million potentially generating $12 billion in annual revenue. Nasser also pointed to declining global oil inventory levels, suggesting potential future price rises amid geopolitical uncertainties.
The recent Aramco financial results align with OPEC+’s decision to initiate an increase in oil production starting this April. This decision marks the group’s first production boost since 2022 and may potentially drive oil prices lower over time by adding 2.2 million barrels of crude oil per day gradually.
However, expert commentary highlights that this move is a controlled attempt to moderate oil prices to levels favorable for key global stakeholders, including Prince Mohammed’s aspirations and Trump’s potential interests. Saudi Arabia’s cost-effective oil production capabilities remain significant, with the Kingdom benefiting substantially from price increases. The Saudi government’s major share ownership in Aramco mirrors its economic stake, and while deliberation over offering more shares continues, the implications of these strategic steps will shape the Kingdom’s financial directions.
Aramco Profits Fall; Saudi Plans Face Challenges
