Saudi Arabia’s Aramco reported a $106 billion profit in 2024, down 12% from 2023 due to falling energy prices. The decline impacts the kingdom’s extensive development plans, including the $500 billion NEOM project. Aramco announced lower dividends and faces increased debt while geopolitical factors influence future earnings.
Saudi Arabia’s state-owned oil leader, Aramco, announced a profit of $106.25 billion for the year 2024, representing a 12% decrease from the prior year due to declining energy prices. This downturn poses challenges to Saudi Arabia’s ambitious multi-trillion-dollar development plans. Simultaneously, Crown Prince Mohammed bin Salman is spearheading projects, including the $500 billion NEOM city and extensive infrastructure upgrades for the 2034 FIFA World Cup.
While negotiating potential $600 billion investments to attract foreign capital, the kingdom may face increased debt levels to uphold the Crown Prince’s vast initiatives. A filing on the Tadawul stock exchange indicated Aramco generated revenue of $436 billion in 2024, slightly lower than $440.88 billion in 2023. The company previously reported a profit of $121 billion in 2023, down from a record high in 2022, as declining energy prices continued to impact earnings.
The stock price for Aramco has seen declines recently, trading at around $7.33 per share, down from a yearly peak of $8.71, reflecting broader trends in oil prices. Currently, benchmark Brent crude is priced at $73, experiencing a 10% decrease this year. Despite these challenges, Aramco maintains a market value of $1.74 trillion, ranking as the world’s sixth-most valuable company, trailing behind tech giants such as Apple and Microsoft.
In efforts to stabilize returns, Aramco declared dividends totaling $21.36 billion for the fourth quarter, along with an anticipated annual dividend of $85.4 billion, which is less than previous years’ distributions. Aramco’s CEO, Amin H. Nasser, emphasized the company’s strength, stating, “Our strong net income and increased base dividend illustrate Aramco’s exceptional resilience.”
Additionally, amidst rising geopolitical challenges, OPEC+ has agreed to an increase in oil production set to begin in April, which may further depress oil prices. The alliance’s decision follows President Trump’s criticism regarding oil production levels. Given its ample and easily accessible oil reserves, Saudi Arabia benefits significantly from oil price fluctuations, with an estimated $40 billion annual increase for every $10 rise in oil prices, as noted by the Institute of International Finance.
Ultimately, the Saudi government retains a substantial portion of Aramco’s shares, having originally offered a fraction to the public in late 2019 and considering additional public offerings to support fiscal needs. The overall trajectory of Aramco’s financial performance reflects the interplay between global energy prices and ambitious domestic development initiatives.
In summary, Aramco’s reported profit of $106.25 billion for 2024 marks a notable decrease attributed to lower energy prices, ultimately impacting Saudi Arabia’s extensive development projects. The company’s stock performance reflects broader oil market trends, while geopolitical dynamics may further complicate financial stability. Continued investments and production strategies will be crucial for the kingdom as it navigates these challenges while seeking to fulfill its ambitious goals.
Original Source: apnews.com
