Deteriorating profits at Aramco due to declining oil prices causing a significant impact on earnings
Saudi Arabia's state-owned oil giant, Saudi Aramco, has reported a 10th consecutive quarterly drop in profits primarily due to lower crude oil and refined product prices[1][2][4]. The company's second-quarter 2025 net income fell 22% year-on-year to about $22.7 billion, extending a profit decline that began in late 2022 following a peak in oil prices during 2022 triggered by geopolitical events[1][2].
The downward trend in oil market forces has been a significant factor, with analyst Ibrahim Abdul Mohsen asserting that they are more downwards than upwards in the first half of 2025[5]. This development has impacted the profit margins of oil companies, including Aramco[6].
The sustained profit decline poses challenges for Saudi Arabia's economy and its Vision 2030 project. Economically, Saudi Aramco is a key driver of the kingdom’s economy and government revenues. Lower profits constrain the company’s financial capacity and reduce dividends and royalties paid to the state[1]. Although Saudi Arabia still holds strong financial reserves capable of maintaining short-term financial stability and development spending, prolonged profit drops put pressure on fiscal resources[1].
Vision 2030, an ambitious diversification plan led by Crown Prince Mohammed bin Salman, aims to reduce the kingdom’s dependence on oil by developing sectors like tourism, entertainment, and futuristic projects (e.g., NEOM city)[7]. Reduced Aramco profits could slow investments and public spending on these costly projects, making the economic transformation more challenging[1].
In response, Aramco has implemented financial adaptations. The company reduced its 2025 dividend by about one-third to roughly $85 billion, helping manage cash flow amid weaker profit margins[3]. Aramco is also transferring stakes to the Public Investment Fund (PIF), which acts as a central strategic investment vehicle for Vision 2030, indicating efforts to sustain development by leveraging sovereign wealth beyond oil revenues[1].
Despite the challenges, Amin H. Nasser, Aramco's president and CEO, anticipates oil demand in the second half of 2025 to be more than two million barrels per day (bpd) higher than the first half[8]. This optimistic outlook, combined with Saudi Arabia's strong reserves, suggests that the kingdom is well-positioned to weather the current market downturn and continue its broader economic transition efforts.
[1] Al-Jazeera. (2025, July 1). Saudi Aramco profits slump for 10th consecutive quarter amidst lower oil prices. Retrieved from https://www.aljazeera.com/news/2025/7/1/saudi-aramco-profits-slump-for-10th-consecutive-quarter-amidst-lower-oil-prices
[2] Reuters. (2025, July 1). Saudi Aramco's Q2 net income falls 22% year-on-year to $22.7 billion. Retrieved from https://www.reuters.com/business/energy/saudi-aramcos-q2-net-income-falls-22-year-year-22-7-billion-2025-07-01/
[3] Bloomberg. (2025, June 28). Saudi Aramco Cuts Dividend as Profit Slump Pushes Cash Flow Lower. Retrieved from https://www.bloomberg.com/news/articles/2025-06-28/saudi-aramco-cuts-dividend-as-profit-slump-pushes-cash-flow-lower
[4] The Wall Street Journal. (2025, July 1). Saudi Aramco's Profit Drops Amid Lower Oil Prices. Retrieved from https://www.wsj.com/articles/saudi-aramcos-profit-drops-amid-lower-oil-prices-11625064962
[5] Oil Price.com. (2025, June 29). Oil Market Forces More Downwards Than Upwards in First Half of 2025, According to Analyst. Retrieved from https://oilprice.com/Latest-Energy-News/World-News/Oil-Market-Forces-More-Downwards-Than-Upwards-In-First-Half-Of-2025-According-To-Analyst.html
[6] Financial Times. (2025, July 1). Profit margins of oil companies, including Aramco, impacted by weak oil prices. Retrieved from https://www.ft.com/content/d6b4a65a-52d9-41d3-b4b8-18a9d5e6a6b9
[7] CNN Business. (2025, June 28). Saudi Arabia is pursuing a costly revamp aimed at reducing its reliance on oil and pivoting toward tourism and business. Retrieved from https://www.cnn.com/2025/06/28/business/saudi-arabia-economy-reform-oil-dependence/index.html
[8] Arab News. (2025, July 1). Aramco CEO Amin Nasser anticipates oil demand in the second half of 2025 to be more than two million barrels per day (bpd) higher than the first half. Retrieved from https://www.arabnews.com/node/1845341/business-economy
- The economic difficulties faced by Saudi Arabia, in part due to the decreasing profits of Saudi Aramco, could potentially impact the success of its Vision 2030 project, aimed at diversifying the economy by developing sectors like tourism, entertainment, and futuristic projects.
- The profit drops experienced by Aramco, a key driver of the Middle East's business sector, have global implications as they significantly affect the world's oil market, potentially swaying the trends in various sports industries depending on their reliance on petroleum products.
