Oil Giant Aramco Struggles to Keep Up as Lower Prices Undercut Profits
Despite pumping more oil, Saudi Aramco continues to see its earnings shrink—underscoring the challenges the kingdom faces as it tries to modernize its economy while depending on a volatile commodity.
In the second quarter of 2025, Aramco reported net earnings of $22.8 billion, down 19% from the same period last year. It’s the company’s tenth straight quarterly drop in profit, falling short of market forecasts and raising fresh concerns about the long-term sustainability of its dividend-heavy model.
Crude prices have played a major role in the downturn. Brent averaged nearly $20 less per barrel than it did a year ago, currently hovering below $70. That’s a critical level—well under the $90 benchmark the IMF says Saudi Arabia needs to balance its budget.
While Aramco has been gradually ramping up production, the added supply is entering an already saturated market, with global inventories swelling and demand forecasts dimming, particularly from China.
The company’s cash flow also remains under pressure. Even after announcing a one-third cut to its 2025 dividend—down to $85 billion—Aramco is still struggling to fully fund the payout, reflecting tighter margins and reduced revenue streams. This shortfall threatens to complicate Crown Prince Mohammed bin Salman’s high-cost economic diversification plans, which rely heavily on oil-generated income.
Meanwhile, Aramco’s stock performance has lagged behind that of Western peers. ExxonMobil, Chevron, and Shell all beat earnings expectations thanks to stronger production numbers, while TotalEnergies came close. Aramco, by contrast, finds itself caught between global price headwinds and domestic fiscal commitments—leaving little room to maneuver.
As output from Saudi Arabia inches toward 10 million barrels a day, the oil giant faces a difficult balancing act: boosting supply to stay relevant, while avoiding a deeper price slump that could worsen its fiscal outlook.
Source: Bloomberg
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