Aramco Reports $106 Billion Profit in 2024 Amid Lower Energy Prices
Aramco reported a $106 billion profit for 2024, a 12% decline due to lower energy prices impacting Saudi Arabia’s development plans. The company anticipates reduced dividends and faces increasing production and geopolitical challenges as OPEC+ increases output. This financial landscape raises concerns about the kingdom’s economic stability in light of ambitious investment initiatives.
Saudi Arabia’s national oil company, Aramco, announced a profit of $106.25 billion for 2024, reflecting a 12% decrease compared to the previous year, largely attributed to falling energy prices that impact the kingdom’s extensive development initiatives. Crown Prince Mohammed bin Salman is actively pursuing ambitious projects, including the $500 billion NEOM development and infrastructure upgrades in preparation for the 2034 FIFA World Cup.
The economic landscape remains challenging as Aramco reported revenues of $436 billion in 2024, a slight decline from $440.88 billion in 2023. The decrease in profit from $121 billion in 2023, down from a record high in 2022, stems from reduced revenue, escalating operational costs, and a decline in financing income. As oil prices decline, Aramco’s stock shares have experienced a significant drop from $8.71 to around $7.33 each.
Aramco plans to distribute dividends of $21.36 billion for the fourth quarter, complemented by a reduced performance dividend totaling $220 million. For the entire year, the company expects to allocate $85.4 billion in dividends, potentially limiting the financial resources available for the Saudi monarchy. Aramco’s CEO, Amin H. Nasser, noted, “Our strong net income and increased base dividend illustrate Aramco’s exceptional resilience.”
The release of Aramco’s financial results coincided with a meeting of OPEC+, where the group agreed to increase oil production, marking the first escalation in output since 2022. This decision may exert further downward pressure on oil prices, compounding the economic challenges facing Saudi Arabia. Given its substantial oil reserves, Saudi Arabia’s production costs remain among the lowest globally, allowing significant revenue potential with higher oil prices.
In summary, Aramco’s reported profit decrease highlights the challenges posed by declining energy prices amid extensive development plans in Saudi Arabia. With significant investments in mega-projects and a reduced dividend outlook, the oil giant faces pressures that may necessitate new borrowing strategies. The geopolitical dynamics and planned increases in oil production could further complicate the kingdom’s economic prospects moving forward.
Original Source: www.clickondetroit.com
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