Aramco Q1 Profit Drops 4.6% to $26 Billion Due to Oil Prices
Saudi Arabia’s state-owned oil conglomerate, Saudi Arabian Oil Co. (Aramco), reported first-quarter net income of $26 billion (€23.4 billion), a 4.6% decline year-on-year, as global crude benchmarks softened and weighed on revenues.
Financial Performance Summary
- Revenues: $108.1 billion vs. $107.2 billion in Q1 2024
- Net Profit: $26 billion vs. $27.2 billion in the prior year’s quarter
- Average Brent Price: $63/barrel vs. $80/barrel a year ago
Despite a modest rise in total revenues, declining benchmark oil prices and narrowing downstream margins pressured net profit. Aramco maintains one of the lowest upstream lifting costs in the industry—around $2 per barrel—but refining spreads tightened amid slowing global demand.
Capital Expenditure and Investment Strategy
Aramco’s capital expenditure (capex) for 2025 is forecast at $40–45 billion, allocated across:
- Upstream expansion projects in the Shaybah and Manifa fields
- Petrochemical capacity growth through the SATORP and SADAF joint ventures
- Low-carbon ventures, including carbon capture & storage (CCS) facilities and blue hydrogen pilot plants
“We are accelerating strategic investments in energy transition technologies while optimizing our core hydrocarbon portfolio,” said Aramco President & CEO Amin H. Nasser.
OPEC+ Production and Market Impact
The OPEC+ coalition has agreed to lift output by 411,000 barrels per day starting next month, amid inventory draws in the US and Asia. Saudi Arabia’s voluntary contribution accounts for roughly two-thirds of the increase, challenging prices at a time of persistent macroeconomic uncertainty.
Implications for Saudi Vision 2030
Lower oil revenues could place additional pressure on the government’s fiscal buffers and financing for mega-projects under Vision 2030. Key initiatives include:
- NEOM: A planned $500 billion smart city on the Red Sea coast
- World Cup 2034: Infrastructure and stadium developments estimated at tens of billions of dollars
- International Investments: A pledged $600 billion into the US, with aspirations to reach $1 trillion over the next term
Market Outlook and Hedging Strategies
Industry analysts from the International Energy Agency (IEA) forecast global oil demand growth of 1.2 million barrels per day in 2025, driven by Asia and emerging markets. Aramco employs a diversified hedging program covering up to 30% of expected volumes, using Brent and WTI futures to mitigate spot price volatility.
Expert Perspectives
“Aramco’s ultra-low production costs provide a competitive edge, but future profitability hinges on refining margins and successful deployment of low-carbon technologies,” noted energy consultant Dr. Lila Khoury of PetroGlobal Insights.