To start off, Saudi oil giant Aramco reported a 4.6% Aramco Q1 profits fall in net income for the first quarter. The company posted a profit of $26.01 billion, despite lower crude prices and rising operational costs.
Although profits dipped, Aramco Q1 profits still beat the analysts’ average forecast of $25.36 billion. Meanwhile, shares climbed slightly by 0.64%, even though they remain down 10.9% for the year.
Besides that, Aramco confirmed total dividends of $21.36 billion for the quarter, including $219 million in performance-linked payouts. This payout mechanism started after oil prices surged in 2022 due to the Russia-Ukraine conflict.
Saudi Arabia continues to rely heavily on Aramco’s returns for budget and national projects. Oil accounted for 62% of Saudi government income last year, driving its massive spending plans.
However, Aramco Q1 profits faced pressure from economic instability and weakening global oil demand. CEO Amin Nasser highlighted Aramco’s resilience and low-cost operations in his recent statement.
At the same time, he emphasized the value of careful capital planning and long-term thinking in turbulent markets. Brent crude dropped from $82.03 in January to $63.91 recently, affecting Aramco’s revenue stream.
As a result, the company lowered its full-year dividend forecast from $124 billion to $85.4 billion. Performance-linked payouts dropped nearly 98% as free cash flow fell to $19.2 billion. Free cash flow declined by 15.8% from the previous year, reducing shareholder returns.
Despite this, Aramco Q1 profits increased capital spending by 15.9% to over $12.5 billion. The firm plans capital investments between $52 billion and $58 billion for 2025.
Notably, OPEC+ has agreed to raise oil output slightly in May and June to stabilize the market. Saudi Arabia will increase production to nearly 9.37 million barrels per day during this period. And Nasser noted the country’s spare capacity allows for quick production boosts when needed.
Above all, Trump has called for lower oil prices and more Saudi investments in the U.S. economy. Aramco Q1 profits reflect Saudi Arabia’s broader economic balancing act under Vision 2030.
Thus, the government must juggle lower oil revenue with its large-scale spending on mega-projects. Although challenges remain, Aramco remains central to both the kingdom’s economy and global oil markets.
