Daijiworld Media Network – Riyadh

Riyadh, May 11: Saudi oil giant Aramco on Sunday reported a 4.6% drop in its first-quarter net profit, citing weaker oil prices and higher operating costs. The net income for the three months ending March 31 stood at 97.54 billion riyals ($26.01 billion), slightly beating analyst expectations.

Despite the dip, the world’s largest oil exporter confirmed total dividends of $21.36 billion for Q1, including $219 million in performance-linked dividends a structure introduced following the 2022 oil windfall triggered by the Russia-Ukraine war.

Oil remains the backbone of Saudi Arabia’s economy, contributing 62% of government revenues in 2024. The IMF estimates the kingdom needs oil priced at $92.3 per barrel this year to balance its budget. However, global benchmark Brent crude, which peaked at $82.03 in January, has since dropped to $63.91, reflecting concerns over global trade and slowing economic growth, worsened by US-China tensions.

Aramco’s free cash flow fell nearly 16% to $19.2 billion, prompting a sharp cut in its performance-linked dividends down by almost 98% from $43.1 billion last year. The company now expects to declare $85.4 billion in total dividends for 2025, compared to over $124 billion in 2024.

Chief Executive Amin Nasser acknowledged that global trade uncertainty had pressured oil markets in early 2025. “Such periods highlight the value of our low-cost operations and disciplined capital planning,” he said.

The Saudi state, which owns about 81.5% of Aramco directly and another 16% through its Public Investment Fund (PIF), relies heavily on Aramco’s payouts to fuel diversification projects under Vision 2030. These include preparations for the 2034 FIFA World Cup, with 15 stadiums being built or renovated as part of scaled-back but essential infrastructure goals.

Aramco’s capital expenditure rose 15.9% to $12.5 billion in the first quarter, with full-year investments projected between $52 billion and $58 billion. Last year, capex stood at $50.4 billion.