Members of media chat earlier than the beginning of a press convention by Aramco on the Plaza Convention Heart in Dhahran, Saudi Arabia November 3, 2019.
Hamad I Mohammed | Reuters
Saudi Aramco’s first-quarter internet revenue fell 5% year-on-year amid decrease oil costs and manufacturing.
Internet revenue for the three months to March 31 got here in at $26 billion, down from $27.3 billion for a similar interval final yr, the corporate reported. The determine was barely above analyst expectations of $25.3 billion.
Aramco introduced its free money move for the quarter at $19.2 billion, down from $22.8 billion within the first quarter of 2024, and money move from working actions at $31.7 billion in comparison with final yr’s $33.6 billion.
The figures sign persevering with pressure for the Saudi state oil large’s steadiness sheet as crude costs present no signal of recovering and international demand slows in keeping with pressures on commerce.
The corporate in March introduced it will be slashing its performance-linked dividend payout for the fourth quarter of 2024 to $200 million — down from $10.2 billion the earlier quarter — and repeated that $200 million determine for the first-quarter of this yr, to be paid within the second quarter.
Its first-quarter base dividend excluding the performance-based payouts elevated by 4.2% year-on-year to $21.1 billion. But when assessed in complete, the dividend fell from $31 billion in the identical interval final yr to $21.36 billion now, as a result of lower to its performance-linked component.
“Global trade dynamics affected energy markets in the first quarter of 2025, with economic uncertainty impacting oil prices,” Aramco CEO Amin Nasser stated in an announcement accompanying the earnings report.
“In this context, Aramco’s robust financial performance once again demonstrated the Company’s unique scale, its reliability and flexibility, the value of its lowcost operations … Such periods also highlight the importance of disciplined capital planning and execution while we continue to take a long-term view.”
Nasser added, “In volatile times Aramco’s resilience underpins both our financial performance and our sustainable and progressive base dividend.”
Bearish oil market forward
The large dividend discount eases strain on Aramco itself, however means much less income for the Saudi authorities because it faces widening deficits and mounting debt as a result of pricey megaprojects and decrease oil costs.
The dominion additionally constrained its oil income potential by sustaining months of coordinated OPEC+ manufacturing cuts meant to stabilize the market. That coverage modified dramatically after Saudi Arabia and a number of other of its OPEC+ allies introduced a shock acceleration to manufacturing improve plans in April, at the same time as markets and crude costs have been tanking on the information of U.S.-imposed international tariffs.
In early Might, OPEC+ once more raised its manufacturing goal for June by 411,000 barrels per day — the second consecutive month of accelerated unwind of the two.2 million-barrel per day voluntary cuts that had been in place for the reason that begin of 2024.
Banks and vitality businesses have steadily downgraded their oil worth outlooks for the yr, anticipating giant provide gluts and weak demand. The U.S. Vitality Data Administration’s newest forecast sees Brent crude averaging $65.85 per barrel this yr, whereas Morgan Stanley lower its worth outlook to $62.50 per barrel within the second half of this yr, down by $5 per barrel from the financial institution’s earlier forecast.
Morgan Stanley additionally predicts a market glut of as much as 1.1 million barrels per day within the second half of 2025 — a rise of 400,000 bpd from its earlier surplus name.
Goldman Sachs, in the meantime, sees Brent averaging $60 per barrel within the the rest of 2025, in comparison with $63 beforehand, and $56 per barrel in 2026, in comparison with $58 beforehand.
Saudi Arabia wants oil at greater than $90 a barrel to steadiness its finances, the Worldwide Financial Fund estimates. Goldman Sachs in mid-April warned that Brent crude at $62 a barrel — its worth forecast on the time — might greater than double the dominion’s 2024 finances deficit of $30.8 billion.
“In Saudi Arabia, we estimate that we’re probably going to see the deficit go up from around $30 to $35 billion to around $70 to $75 billion, if oil prices stayed around $62 this year,” stated Farouk Soussa, MENA economist at Goldman Sachs. The financial institution’s forecast for the remainder of 2025 now sits at $60 per barrel.
“That means more borrowing, probably means more cutbacks on expenditure, it probably means more selling of assets, all of the above,” Soussa advised CNBC final month. “And this is going to have an impact both on domestic financial conditions and potentially even international.”
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