Saudi Aramco posts drop in quarterly revenues amid lower crude, oil products prices

Core Insights - Saudi Aramco reported a decline in second-quarter revenues due to lower crude oil and refined chemical product prices, despite higher traded volumes [2][4] - The adjusted net income for the second quarter was 92.04 billion Saudi riyals ($24.5 billion), exceeding analyst expectations of $23.7 billion [2] - Revenues fell to 378.83 billion Saudi riyals from 425.71 billion Saudi riyals year-over-year [2] Market Outlook - Aramco's CEO indicated strong market fundamentals, predicting oil demand in the second half of 2025 to exceed two million barrels per day compared to the first half [3] - Crude prices have remained low throughout the year, influenced by geopolitical tensions and trade tariffs affecting demand outlook [4] Production and Financial Strategy - Aramco's income is expected to increase as Saudi Arabia and its partners unwind 2.2 million barrels per day of voluntary cuts, with production reaching 9.356 million barrels per day in June [5] - The company has engaged in debt markets, issuing $9 billion in the second half of 2024 and a $5 billion bond sale this year [6] Dividend Policy - Aramco's dividend policy was adjusted, reducing expected returns for 2025 to $85.4 billion from $124.2 billion in 2024, following a decline in net profits [6] - The company declared a base dividend of $21.1 billion and a performance-linked dividend of $0.2 billion for the third quarter [6] - As of Monday, Aramco's dividend yield was 5.5%, outperforming U.S. peers Exxon Mobil and Chevron [7] Economic Impact - Aramco's dividends significantly impact Saudi Arabia's budget, which is working to diversify its economy under the Vision 2030 program [7] - Saudi Arabia's GDP grew by 3.9% in the second quarter, driven by non-oil activities [7]