Aramco Announces $106 Billion Profit Decline Amid Lower Energy Prices

Aramco reports a $106.25 billion profit for 2024, a 12% decrease from the prior year due to lower energy prices. The financial dip affects Saudi Arabia’s extensive development goals, including the $500 billion NEOM project and infrastructure for the 2034 FIFA World Cup. Aramco’s stock has fallen, with OPEC+ planning to increase oil production, potentially leading to further price drops.

Saudi Arabia’s state-owned oil company, Aramco, announced a profit of $106.25 billion for 2024, reflecting a 12% decline from the previous year. The reduction in profit is attributed to decreasing energy prices impacting the kingdom’s extensive developmental initiatives. Consequently, funding for ambitious projects, including a $500 billion development at NEOM and infrastructure projects for the 2034 FIFA World Cup, is under pressure.

Crown Prince Mohammed bin Salman is investing heavily in these projects; however, lower oil revenues may necessitate increased borrowing to support these ventures. Aramco’s reported revenues for 2024 were $436 billion, slightly down from $440.88 billion in 2023, with 2023’s profit also down from a record high due to energy price declines.

Despite the decrease, Aramco’s CEO Amin H. Nasser emphasized the company’s resilience by stating that the earnings reflect its strong net income. However, stock prices for Aramco have fallen, trading at approximately $7.33 per share, down from a yearly high of $8.71.

The company faces ongoing geopolitical challenges, and the recent OPEC+ meeting led to an agreement on increased oil production set to commence in April, which could further depress prices. Such production increases, the first since 2022, stem from external pressures including commentary from President Trump regarding the oil cartel.

Aramco’s substantial market value of $1.74 trillion positions it behind only five other global corporations. The majority of shares remain under government ownership, with some shares having been publicly listed in late 2019. Aramco has announced upcoming dividend payments totaling $85.4 billion for the year, although this amount is notably lower than previous distributions, affecting national finances significantly.

In summary, Aramco’s profit decline to $106.25 billion reflects lower energy prices complicating Saudi Arabia’s ambitious development plans. While the company continues to demonstrate resilience, challenges from increased oil production and external political pressures may influence future financial performance and necessitate additional borrowing. Amid these, Aramco’s stature as a leading global enterprise remains firmly established.

Original Source: apnews.com