Aramco Posts $26 Billion Q1 Profit, Down 4.6% Amid Lower Oil Prices
Saudi Aramco, the world’s largest oil exporter, reported a 4.6% decline in net profit for the first quarter of 2025 due to falling oil prices and rising operating costs.
- The company posted a net profit of $26.01 billion, beating a median analyst estimate of $25.36 billion.
- This dip reflects a broader downtrend in global energy markets, driven by geopolitical and economic uncertainty.
Dividends Remain Strong Despite Earnings Decline
Aramco confirmed total dividends of $21.36 billion for the quarter, including $219 million in performance-linked payouts, a mechanism introduced following the 2022 oil windfall.
- Despite lower earnings, Aramco continues to be a major revenue source for the Saudi government, which holds an 81.5% direct stake, with another 16% held by the PIF.
- The payout supports the government’s diversification strategy, helping fund large-scale projects beyond the oil sector.
Oil Prices and Market Headwinds Pressure Revenues
Brent crude, the global benchmark, has steadily fallen from a 2025 high of $82.03 in January, closing at $63.91 on Friday, adding pressure to oil-reliant economies.
- The trade war between the US and China has also unsettled markets, contributing to reduced energy demand and investor caution.
- Aramco’s free cash flow dropped 15.8% to $19.2 billion, reflecting shrinking margins as oil prices declined.
Capital Expenditure Grows as Company Plans Long-Term
Despite the revenue dip, capital expenditure rose by 15.9% year-on-year to just over $12.5 billion in Q1.
- Aramco is targeting total capital investments of $52–58 billion in 2025, up from $50.4 billion in 2024, reaffirming its long-term growth outlook.
- CEO Amin Nasser emphasized the importance of disciplined capital planning, noting that Aramco’s low-cost operations remain a key competitive advantage.
Lower Forecast for 2025 Dividends Reflects Market Conditions
The company earlier projected 2025 dividends of $85.4 billion, a sharp drop from $124 billion in 2024, largely due to lower free cash flow and reduced performance-linked dividends.
- Last year, $43.1 billion of the payout was performance-based, but that figure is set to fall by around 98% this year.
- These adjustments indicate Aramco’s cautious stance amid a volatile market environment.
Saudi State Adjusts Vision Amid Budget Strain
Oil accounted for 62% of Saudi Arabia’s revenue last year, and the IMF estimates the country needs oil at $92.3 per barrel in 2025 to balance its budget.
- As fiscal pressures mount, the government is scaling back certain megaprojects and prioritizing key developments like 15 stadiums for the 2034 World Cup.
- These revisions highlight the balancing act between economic diversification and fiscal discipline amid rising project costs.
