Aramco’s announcement of a $121 billion profit for the previous year, though a significant decrease from its record-breaking $161 billion in 2022, still underscores its dominance in the global oil market. The decline in profits can be attributed to several factors, chief among them being the decrease in energy prices, which has been a result of ongoing production cuts by members of the OPEC+ alliance. These cuts, while aimed at stabilizing and even boosting global energy prices, have inevitably impacted Aramco’s bottom line.
The reduced profits present challenges for Saudi Arabia, particularly as it moves forward with its ambitious development projects aimed at diversifying its economy and reducing its dependence on oil revenues. The kingdom, under the leadership of its assertive crown prince, has been actively seeking to transition its economy away from oil, recognizing the volatility and uncertainty inherent in relying solely on oil revenues.
Aramco’s filing to the Tadawul stock market highlights the various factors contributing to the decrease in profits, including lower crude oil prices, reduced sales volumes, and declining margins in refining and chemicals. These challenges reflect the broader trends and challenges facing the global energy sector, including geopolitical tensions, fluctuating demand, and the transition towards renewable energy sources.
Despite the lower profits, Aramco’s decision to increase dividends to shareholders to over $31 billion in the fourth quarter demonstrates its commitment to returning value to investors. This move may help reassure investors amidst the uncertainty surrounding global energy markets and the broader economic landscape.
