- Aramco’s annual profit falls to $106B amid 10% oil price decline
- NEOM megacity and World Cup 2034 require $1.1T+ in investments
- OPEC+ production increase could push Brent crude below $70/barrel
Saudi Arabia’s economic transformation faces mounting pressure as its state oil giant confronts a 12% earnings decline. The $106 billion net income for 2024 marks the second consecutive yearly drop, reflecting persistent challenges in global energy markets. With Brent crude hovering near $73 – down 10% year-to-date – analysts suggest Riyadh may need to revise its break-even oil price projections.
The profit contraction coincides with unprecedented capital demands from Crown Prince Mohammed bin Salman’s Vision 2030 projects. Construction of the 170km linear NEOM city continues in the Tabuk Province, while World Cup preparations require 14 new stadiums by 2034. Concurrently, Saudi Arabia’s proposed $600B U.S. investment package could strain foreign reserves currently at $453B.
Energy economists highlight a critical paradox: The kingdom requires $98 oil to balance its budget but faces OPEC+ pressure to increase production. Monday’s decision to lift output quotas signals Saudi commitment to market share over price support – a strategy that risks further revenue erosion. Each $10/bbl price drop reduces annual oil income by $40B according to IIF estimates.
Aramco’s dividend strategy reveals tightening fiscal constraints. The planned $85B payout for 2024 represents a 29% reduction from 2023 levels, potentially limiting the Public Investment Fund’s capacity to finance giga-projects. Meanwhile, the stock’s 16% annual decline reflects investor concerns about peak oil demand and renewable energy transitions.
The petrochemical sector’s underperformance exacerbates challenges. Despite a $7B Q4 dividend, Aramco’s operating costs rose 18% due to expanded refining capacity and CCS investments. The company’s $1.74T valuation now trails five tech giants, underscoring shifting global investment priorities.
Regional Case Study: NEOM’s hydrogen plant delays illustrate execution risks. Originally slated for 2025 completion, the $8.4B green energy facility now faces 2-year postponement due to supply chain bottlenecks – a warning for Saudi’s 2060 net-zero ambitions.
