Aramco's Profit Squeeze: Lower Oil Prices Impact Saudi Development

Saudi Arabia's Aramco reported a $106.25 billion profit in 2024, a 12% drop from the previous year due to lower energy prices. This impacts the kingdom's development plans, including the $500 billion NEOM project. Aramco's profit decline may prompt Saudi Arabia to incur new debt.

In a striking financial announcement, Saudi Arabia's state-controlled oil giant, Aramco, has declared a $106.25 billion profit for 2024, marking a 12% decrease from the previous year. The decline is attributed to dwindling energy prices, exerting pressure on Saudi Arabia's expansive multi-trillion-dollar development projects.

Central to these development ambitions is the Crown Prince Mohammed bin Salman's futuristic $500 billion NEOM city in Saudi Arabia's western desert on the Red Sea. Additional major investments include preparation for hosting the 2034 FIFA World Cup, though these plans may necessitate acquiring additional debt.

The situation is further complicated by OPEC+'s decision to increase oil production, which could further depress oil prices. This economic scenario puts significant financial pressure on the kingdom, calling for an urgent assessment of its fiscal strategies.