Saudi Aramco profits fall 12% as oil prices drop: FT
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Saudi Arabia's state-owned oil giant, Aramco, reports a profit of $106.25 billion in 2024, a 12% decline from the previous year due to lower energy prices.
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Workers stand on a platform at a Saudi Aramco oil separator processing facility in Abqaiq, near Dammam in the Kingdom's Eastern Province on September 20, 2019. (AP)
A Financial Times report on Tuesday revealed that Saudi Aramco, the world's largest oil company, saw a 12% decline in profit in 2024 and reduced its dividend, dealing a setback to Saudi Arabia's growing budget deficit.
Saudi Aramco's net income for the year was $106.25 billion, down from $121 billion in 2023 due to falling energy prices. The company announced a dividend of just over $85 billion, compared to $124 billion the previous year.
According to the FT report, the oil giant's dividend has been crucial in funding Crown Prince Mohammed bin Salman's economic transformation of Saudi Arabia, but the average oil price has dropped significantly from over $100 per barrel in 2022.
On Tuesday morning, benchmark Brent crude was trading at $71 per barrel. Saudi Aramco holds several million barrels per day of spare capacity, as Saudi Arabia reduced its production to support oil prices. Should Saudi Arabia choose to increase oil production, each additional million barrels per day "could generate an additional $12bn in operating cash flow, based on 2024’s average price."
The OPEC+ oil cartel agreed on Monday to the first oil production increase by the group since 2022.
Saudi Aramco's chief executive, Amin Nasser, said, "Global oil demand reached new highs in 2024, and we expect further growth in 2025."
Saudi Arabia plans further borrowing spree to pay for projects
In January, Saudi Arabia indicated it plans to continue a similar borrowing pace in 2025 to support its massive oil-diversification initiatives, Bloomberg reported on January 7.
The kingdom was one of the top bond issuers in emerging markets last year, and its financial needs are slated to be 139 billion riyals ($37 billion), according to the National Debt Management Center.
The NDMC stated that a little over 100 billion riyals will be utilized to fund the budget shortfall, with the remainder going toward repaying maturing debt.
In addition to issuing bonds, the Saudi government is also expected to secure loans. Last Monday, it announced a $2.5 billion, three-year revolving credit arrangement with three banks: Abu Dhabi Islamic Bank, Credit Agricole SA, and Dubai Islamic Bank, according to Bloomberg data.
Bloomberg data indicate that the kingdom sold $17 billion in overseas bonds in 2024, placing it second only to Romania among developing markets. All of Saudi Arabia's bonds were denominated in dollars, but this year it has stated that it may consider other currencies to diversify its funding base.
