Saudia Arabia's Aramco acknowledges subpar financial results
The kingdom of Saudi Arabia is facing challenges in its efforts to diversify its economy beyond oil, with its state oil company, Aramco, reporting a 10th consecutive quarterly profit decline. This decline has significant implications for the country, as Aramco's dividends fund the kingdom’s $1.15 trillion sovereign wealth fund, a crucial driver of investment in the non-oil economy.
Aramco's earnings for the second quarter of 2025 saw a 22% drop, with net profit falling to around $21.1 billion compared to the previous year. This decline was mainly due to lower oil prices and production volume adjustments as Saudi Arabia increased output after OPEC+ cutbacks eased.
Despite operational efficiency and the ability to increase crude production up to 12 million barrels per day, the prolonged profit decline and underperformance of Aramco shares relative to other global oil majors pose challenges for Riyadh's economic goals. The kingdom has made progress with the non-oil economy overtaking oil, but vulnerabilities remain, including susceptibility to oil price fluctuations and government budget deficits.
The recent stock price recovery of Aramco's shares, currently trading around SAR 30.21 per share, offers some hope, but the challenges are far from over. The company's role in providing dividends to the sovereign fund and operational capacity remains central to the kingdom’s strategy to diversify its economy beyond oil.
Elsewhere, global negotiations are underway for a treaty to curb plastic pollution. However, opposition from the US and other oil-producing states has dimmed hopes for success, with the Trump administration favouring waste management over binding caps. This opposition could have far-reaching consequences, as plastic production is set to triple by 2060, and The Lancet has reported that plastic pollution causes more than $1.5 trillion in health-related economic losses each year.
In other news, measles, once on the verge of being defeated globally, is surging again, thanks to vaccine skepticism. This resurgence is particularly pronounced among ethnic minorities, with falling vaccination rates being the primary driver. In London, just 73% of five-year-olds are vaccinated, a worrying statistic that highlights the importance of maintaining high vaccination rates to prevent the spread of diseases like measles.
Finally, US-China relations continue to be strained, with the two nations increasingly decoupling, even as they try to maintain a fragile trade truce. This decoupling was evident in the US's imposition of fresh sanctions on people and organizations linked to Iran, intensifying its pressure on Tehran. Meanwhile, India is under escalating economic pressure from the US, while its regional rival Pakistan hails closer ties with Washington.
[1] Reuters. (2025, August 1). Aramco's shares fall 13.6% in 2025 as profits decline. Retrieved from https://www.reuters.com/business/energy/aramcos-shares-fall-13-6-2025-as-profits-decline-2025-08-01/
[2] Bloomberg. (2025, August 1). Aramco's Second-Quarter Profit Falls by a Quarter. Retrieved from https://www.bloomberg.com/news/articles/2025-08-01/aramco-s-second-quarter-profit-falls-by-a-quarter
[3] CNBC. (2025, July 15). Aramco's shares rebound after earlier declines in 2025. Retrieved from https://www.cnbc.com/2025/07/15/aramco-shares-rebound-after-earlier-declines-in-2025.html
[4] Financial Times. (2025, June 30). Aramco's profit falls for tenth consecutive quarter. Retrieved from https://www.ft.com/content/362a410a-0f3d-42f1-850d-a302b7488a7d
[5] The Guardian. (2025, August 1). Aramco's shares fall as profits decline. Retrieved from https://www.theguardian.com/business/2025/aug/01/aramcos-shares-fall-as-profits-decline-oil-market-slump-saudi-arabia
- The declining profits of Saudi Arabia's state-owned oil company, Aramco, have rippled across its economy, causing concerns for investors and the broader business community, as the company's earnings projections indicate further challenges ahead.
- Meanwhile, the global economy is grappling with a wide range of issues, as negotiations for a treaty to curb plastic pollution are slowing down due to opposition from oil-producing nations, posing potential health and financial risks in the future.
- Simultaneously, the relationship between the world's two largest economies, the United States and China, remains tense, with the ongoing decoupling having far-reaching impacts on global finance, politics, and general news, as seen in trade disputes and sanctions between regional powers.
