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Saudi Aramco Post Dip in Q1-2025 Profit on Weaker Oil Prices
Saudi Aramco reported a 4.6% drop in Q1-2025 profit on May 11 due to lower sales and higher operating costs, as economic uncertainty hit crude markets.
The world’s top oil exporter posted a Q1-2025 net profit of $26.01 billion, down from $27.3 billion in Q1 2024. However, Aramco beat analyst expectations of $25.36 billion for Q1.
As the world’s top oil producer and exporter, Saudi Aramco is the Saudi government’s cash cow.
The decline in net profit comes amid falling Brent crude prices, which plunged to $63 per barrel from a January high of $82 per barrel. OPEC+’s decision to increase output in May and June, and global trade tensions due to US tariffs, led to a steep fall in oil prices.
Saudi Arabia has relied on Aramco’s generous payouts, which also include taxes and royalties, to fuel its growth for decades.
In 2024, oil generated 62% of the Saudi government’s revenue. According to the International Monetary Fund (IMF), Saudi Arabia needs oil at US$92.3 this year to balance its budget.
Aramco’s market value is over $1.6 trillion, making it the 6th richest company behind Microsoft, Apple, NVIDIA, Amazon, and Alphabet.
Saudi Aramco’s Q1 2025 Financial Performance
- Revenue: Aramco recorded revenues of $108.1 billion, up from $107.2 billion in Q1-2024.
- Free Cash Flow: Aramco announced its free cash flow for Q1 at $19.2 billion, down from $22.8 billion in Q1-2024.
- Cash flow from operating activities topped $31.7 billion compared to last year’s $33.6 billion.
- Capital Expenditures: Surged $12.5 billion as part of ongoing investments under Saudi Arabia’s Vision 2030 diversification program.
- Performance-Linked Dividend: $0.2 billion, a significant reduction from $10.8 billion in Q1 2024.
The figures signal a continuing strain on Saudi Aramco’s balance sheet as crude prices hover between $60 and $65 per barrel and global demand slows in line with trade tensions.
Higher Output Coming
OPEC+ members have been lowering production output since 2022 to sustain prices amid growing output from other producers.
With a production capacity of around 12 million barrels per day (bpd), Saudi Arabia tends to shoulder the bulk of the cuts.
However, on May 4, OPEC+ agreed to boost output by 411,000 barrels per day in May and June. As a result, Saudi Arabia’s production will increase from roughly 9 million to around 9.4 million barrels per day.
Read: Saudi Aramco Increases June Oil Prices For Asia Amid OPEC+ Supply Hike
Lower Oil Prices Hurts Saudi Arabia
Global crude benchmark Brent has plunged from its January high of US$82.03 to US$63.91 per barrel as of May 9.
Banks and energy agencies have steadily downgraded their oil price outlooks for 2025, expecting large supply gluts and weak demand.
The US Energy Information Administration’s latest projection sees Brent crude averaging $65.85 per barrel this year.
At the same time, Morgan Stanley slashed its price outlook to $62.50 per barrel for the second half of 2025, down by $5 per barrel from the bank’s previous forecast.
In recent years, the Saudi government has poured vast sums into projects to diversify the economy from oil under Vision 2030.
Lately, it has been constructing or renovating 15 stadiums in preparation for hosting the 2034 World Cup.
Amid lower oil prices, some of the Saudi government’s ambitions include a futuristic city in the desert (the $500 billion Neom city project).
The Saudis have scaled back on the project to prioritize completing projects critical to hosting the 2034 World Cup.
Recent agreements between China and the United States to reduce reciprocal tariffs have raised hopes for ending the US-China trade war, which has negatively affected global markets.
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