Aramco income drops, dividends cut amid oil market uncertainty

Saudi energy giant Aramco reported a drop in first-quarter net income to $26 billion, falling short of market expectations and cutting into a key source of funds for Saudi Arabia’s budget amid an uncertain outlook for oil prices.

The drop led to a $10 billion reduction in its total dividend to $21.4 billion, down from $31 billion in the previous quarter.

The lower dividend will put further pressure on Saudi Arabia’s budget as the kingdom ramps up spending to diversify its economy beyond oil, The Financial Times reports.

Despite the earnings dip, Aramco’s performance was better than many of its peers, including BP, which halved its first-quarter profit, and Shell, which saw its first quarter profit fall by 28%.

Saudi Aramco to pay $31 billion dividend as kingdom seeks to plug budget gap

Saudi Aramco, the world’s largest oil company, will distribute $31 billion in dividends despite a decline in first-quarter profit.

The payout is critical to the Saudi government, which owns 82% of the company and has reported a deficit for the sixth straight quarter.

The kingdom’s budget gap has forced a slowdown in the pace of building NEOM and other ambitious construction projects.

Aramco reported that first-quarter net income declined 14% to $27.3 billion, down from $31.9 billion a year earlier.

The company declared base dividend payouts for the first quarter totalling $20.3 billion and a performance-linked dividend distribution of $10.8 billion to be paid in the second quarter.

Saudi Arabia has pushed other oil producers to cut their output and keep oil prices high amid concerns about rising U.S. production creating surplus supply.