Saudi Aramco has reported a decline of 4.6% in its first-quarter profit, totalling 97.54 billion riyals for the period ending March 31. This drop in profit is attributed to lower sales and increased operating costs, with the economic uncertainty weighing heavily on the global crude markets.
Despite this decline, Aramco’s performance still exceeded analysts’ expectations, as the company had previously provided a median forecast of $25.36 billion. The company’s shares were up by 0.64% to 25.00 riyals as of 0754 GMT, though they have fallen by 10.9% so far in 2025.
The oil giant’s results reflect a broader trend in the oil sector, where the volatility of oil prices has led to mixed outcomes for major producers. After reaching record-high prices in 2022 due to the geopolitical tensions surrounding Russia’s invasion of Ukraine, oil prices have faced a downward adjustment in the subsequent period. This has placed pressure on global oil majors, with many grappling with a shift in both demand and supply dynamics.
Saudi Aramco, which is pivotal to the Kingdom’s economy, has seen its financial performance impacted by fluctuating global oil prices, driven largely by unpredictable demand and supply chain challenges. Crude oil prices have been significantly lower than the levels seen during the height of the Ukraine crisis, which has left Aramco and its peers recalibrating their strategies for growth and profitability.
Operating costs for Aramco have also risen in the quarter, which is another factor contributing to the dip in profits. Higher production and refining expenses, coupled with inflationary pressures on labour and materials, have added to the company’s expenditure.
Aramco confirmed that it would distribute $21.36 billion in dividends for the first quarter, continuing its policy of substantial returns to its shareholders. A portion of these dividends, amounting to $219 million, was attributed to performance-linked payouts, a new mechanism the company implemented after experiencing a windfall from higher oil prices in 2022. This mechanism was designed to reflect the company’s financial resilience and its ability to navigate market challenges, but it also underlines the uncertainties Aramco faces as global oil prices remain in flux.
The economic uncertainty affecting Aramco is not isolated to the oil industry alone. Global markets have been confronting inflationary pressures, interest rate hikes, and slowdowns in major economies, all of which have dampened demand for oil in key markets. Furthermore, competition from renewable energy sources, which are increasingly becoming a priority for both governments and corporations globally, has added to the challenges for traditional oil companies.
Despite these challenges, Aramco continues to maintain a dominant position in the global oil market, owing to its massive reserves and ability to scale production in line with market demands. As the world’s largest oil exporter, it is expected to remain a key player, particularly in the Middle East region. However, its ability to adapt to the shifting global energy landscape will be pivotal for maintaining its profitability in the face of evolving market dynamics.
Looking ahead, Aramco’s strategy includes a greater focus on diversifying its operations. The company has been investing heavily in technologies related to cleaner energy and has voiced ambitions to lead in the transition to a more sustainable energy future. Whether this transition will mitigate the financial pressures from the oil market remains to be seen, but it is clear that Aramco is positioning itself to navigate the complexities of an evolving global energy mix.
