San Francisco Frontiers - Saudi Aramco profits drop 12 percent on lower prices, volumes

The world's biggest crude exporter said profits were down more than 12 percent to $106.25 billion in 2024, the second annual drop following a surge in oil prices in 2022.

Expected dividends for 2025 also fell heavily to $85.4 billion, down from $124.3 billion announced for last year by the mainly state-owned company.

Aramco is the chief source of revenue for Crown Prince Mohammed bin Salman's Vision 2030 reform agenda, which aims to remodel the Gulf kingdom's crude-reliant economy.

Revenues were slightly down "primarily attributable to lower prices and volumes sold of crude oil, as well as lower refined and chemical product prices", a company statement said.

The overall profits decrease was "driven by lower revenue and other income related to sales, higher operating costs, as well as lower finance and other income," it added.

Soaring energy prices following Russia's invasion of Ukraine allowed Aramco to post record profits in 2022, before they dipped by 25 percent in 2023.

In an attempt to prop up prices, Aramco slashed production by 500,000 barrels per day in April 2023 as part of a joint move with the OPEC+ oil producers' alliance.

Aramco followed up with a further cut of one million bpd in June 2023, agreeing last December with other OPEC+ countries to extend the supply cut until March.

- 'Not necessarily rolling in petrodollars' -

Aramco is not the only energy major with lower profits. Britain's Shell saw a 17 percent drop last year and France's TotalEnergies posted a 26 percent decline.

A global surplus, spare production capacity and uncertain demand, coupled with unpredictable policy signals from US President Donald Trump are all weighing on prices, analysts said.

"Prices have remained lower than what Gulf governments like Saudi Arabia would like to see," said Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute and an adjunct assistant professor at Georgetown University.

"Energy market fundamentals are still manageable, but the Saudis aren't necessarily rolling in more petrodollars than they know what to do with."

Saudi Arabia, eyeing a post-oil future, is in the midst of a lavish spending plan aimed at attracting tourists and investment to the Middle East's biggest economy.

Chief among a welter of flashy projects are NEOM, a $500 billion futuristic new city in the desert, the 2034 football World Cup and a major new airport for Riyadh.

Amena Bakr, head of Middle East Insights at trade intelligence company Kpler, said although market sentiment was holding back prices, Saudi could adjust its spending as it needs to.

"Overall the OPEC+ policy has managed to tighten markets in terms of fundamentals, but what's weighing on prices is negative market sentiment," she told AFP.

"Saudi Arabia is known to adjust its budget depending on market conditions, and the kingdom does not target a certain oil price... projects and plans can be adjusted along the way."

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