Saudi Aramco Slashes Dividend as Profit Dips on Lower Oil Prices | OilPrice.com
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Breaking News:
- Aramco’s 2024 profits declined due to lower oil prices and production cuts, resulting in a significant decrease in dividends for 2025.
- The reduced dividends will strain Saudi Arabia’s finances, as the state relies heavily on Aramco’s payouts.
- This financial pressure may force Saudi Arabia to increase debt issuance to cover budget deficits and fund its Vision 2030 program.
Saudi oil giant Aramco on Tuesday reported a drop in 2024 profits and guided for a 30% lower total dividend for this year, which would further strain the finances of the Kingdom of Saudi Arabia.
Aramco, the world’s single biggest crude producer and exporter, booked a net profit of $106.2 billion for 2024, down from $121.3 billion for 2023 as average oil prices fell last year compared to 2023 levels and as Saudi Arabia continues to curb production as part of the OPEC+ agreement.
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For the fourth quarter, Aramco’s board declared a base dividend of $21.1 billion, up by 4.2% year-over-year.
However, the so-called performance-linked dividend was slashed to just $200 million for Q4.
To compare, for the third quarter of 2024, the Saudi state oil giant declared a base dividend of $20.3 billion, plus the sixth distribution of performance-linked dividends of as much as $10.8 billion, bringing the total declared dividends for the third quarter to $31.1 billion.
In the results release today, Aramco said that it expects total dividends of $85.4 billion to be declared in 2025.
This is nearly 30% lower compared to last year’s $124 billion in dividends which included about $43.1 billion in performance-linked dividends.
The lower dividends for 2025 will cut revenues for the Saudi state, which is the biggest shareholder of Aramco via a direct stake of almost 81.5% and an indirect interest via the sovereign wealth fund, the Public Investment Fund (PIF), which has 16% of Aramco.
Saudi Arabia relies on income from oil exports and Aramco’s dividend payouts to finance an ambitious Vision 2030 program, with which the Saudi Crown Prince, Mohammed bin Salman, wants to turn the Kingdom into an investment-friendly destination of doing business and grand projects and to reduce reliance on oil.
Saudi Arabia may have to resort to more debt issues this year to plug the deficit in its budget, which is set to widen with the drop in Aramco’s dividend, analysts say. The Kingdom is estimated to need oil prices at around $90 per barrel to balance its budget.
By Tsvetana Paraskova for Oilprice.com
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