Saudi Arabia's state-owned oil giant Aramco announced on Tuesday its profits had declined in 2024 compared to the previous years, as falling energy prices put pressure on the kingdom's multitrillion-dollar development plans.
The world's biggest crude exporter said profits were down more than 12% to $106.25 billion last year, the second annual drop following a surge in oil prices in 2022.
Already, Saudi's de facto ruler Crown Prince Mohammed bin Salman (MBS) 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+, an alliance of the oil cartel and other energy-producing states, 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. The fall is "primarily attributable to lower prices and volumes sold of crude oil, as well as lower refined and chemical product prices," a company statement said.
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 around $7.33 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 is at $73 – down 10% this 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 than $124.3 billion announced for last year and will further erode cash that Saudi Arabia's monarchy can expect for the year.
"Our strong net income and increased base dividend illustrate Aramco’s exceptional resilience," Aramco CEO and President Amin H. Nasser said in a statement.
The Aramco results come as OPEC+ 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 OPEC+ decision follows criticism by Trump of the cartel as well.
Nasser said Aramco would benefit from Monday's decision by OPEC+.
The market is cyclical and the upside is with Saudi Aramco as it is sitting on 3 million barrels of spare capacity "that can be activated in a matter of weeks to the market when needed," he said on a call shortly after the company released its 2024 results.
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.
