In 2024, Saudi oil giant Aramco reported a profit of $106.25 billion, down 12% from the previous year due to lower energy prices. The company’s revenues declined to $436 billion, impacting its ability to support extensive developmental projects led by Crown Prince Mohammed bin Salman. The recent OPEC+ agreement to increase oil production may further affect Aramco’s profitability and cash flow.
Saudi Arabia’s state-owned oil giant, Aramco, declared a profit of $106.25 billion in 2024, representing a 12% decline from the previous year due to reduced energy prices. This decrease has implications for the kingdom’s expansive development initiatives, which total in the trillions. The Saudi Crown Prince, Mohammed bin Salman, is continuing ambitious projects, including the NEOM city and infrastructure for the upcoming 2034 FIFA World Cup, further necessitating significant financial investments.
The earnings report highlights a revenue of $436 billion for Aramco in 2024, a slight drop from $440.88 billion in 2023. Profitability has been negatively impacted by lower oil prices, higher operational costs, and diminished finance-related income. The company’s shares, trading at around $7.33, have seen a decrease from a peak of $8.71 over the past year as crude oil prices have fallen.
In the fourth quarter, Aramco plans to distribute dividends amounting to $21.36 billion, including a smaller performance dividend of $220 million. The total dividend payout for 2024 is projected at $85.4 billion, reflecting diminishing cash flow for the Saudi monarchy. CEO Amin H. Nasser emphasized the company’s robust net income and commitment to shareholder returns despite market pressures.
The announcement of these financial results coincided with OPEC+’s recent decision to increase oil production starting in April, the first such adjustment since 2022. This increase is anticipated to further suppress oil prices, coinciding with ongoing geopolitical tensions. Saudi Arabia’s oil production remains one of the most cost-effective globally, with significant revenue potential linked to price fluctuations.
While the Saudi government retains ownership of the majority of Aramco’s shares, the company has previously considered increasing its public listing since its partial Initial Public Offering in 2019. The financial outlook for Aramco remains critical as it navigates lower oil prices and the implications for the Saudi economy.
In summary, Aramco’s reported profit of $106.25 billion marks a notable decline, primarily attributed to falling energy prices. The company’s ongoing projects led by Crown Prince Mohammed bin Salman necessitate substantial funding, suggesting potential financing challenges ahead. With OPEC+’s decision to increase production, Aramco may face further pressure on revenues amid a fluctuating oil market.
Original Source: apnews.com
