ARAMCO’S $800 BILLION WIPEOUT DEEPENS SAUDI STRUGGLE TO BREAK OIL DEPENDENCE

Thu 07 August 2025:

Saudi Aramco, the world’s largest oil company, has lost more than $800 billion in market value since its 2022 peak, Bloomberg has reported, marking a nearly 40 per cent decline and raising fresh concerns about the economic health of a kingdom still heavily reliant on fossil fuels.

Shares in Aramco have fallen sharply, losing nearly 40 per cent of their value since 2022. This drop means the company is now worth over $800 billion less than it was at its peak. The decline has been deeper than other major oil firms like Chevron, ExxonMobil and Shell. It also reflects a wider downturn in Saudi Arabia’s stock market and adds new pressure on the kingdom’s already stretched finances.

Despite high-profile promises to reduce its reliance on oil through the Vision 2030 programme, Saudi Arabia still depends heavily on fossil fuels. Oil brings in about 60 per cent of government income and nearly two-thirds of the country’s exports. That dependence is becoming harder to manage as oil prices drop and Aramco’s value continues to fall.

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Aramco’s falling share price is not just bad news for investors, it also affects Saudi Arabia’s ability to raise money. The government has been selling off parts of the company to fund its development plans. But with shares now trading 12 per cent below the price of a recent sale, any further offerings are likely to bring in less than hoped.

There are several reasons behind the company’s decline. A potential surplus of oil on the global market has led to falling prices, and OPEC+’s recent decision to increase output has only added to those concerns. Aramco’s large dividend payments—expected to total $85 billion this year—are also under pressure, especially as profits fall. That payout is still higher than what the company actually earns, meaning Saudi Arabia is effectively withdrawing more than Aramco generates.

According to Bloomberg Economics, Saudi Arabia now needs oil to sell at around $96 per barrel just to balance its budget. That figure rises to $113 per barrel when domestic spending by the Saudi sovereign wealth fund is included. But Brent crude has averaged just $76 this year, and prices dropped again after the OPEC+ announcement, widening the gap between revenue and spending.

To bridge that gap, Riyadh is borrowing more and considering the sale of more state-owned assets. In the meantime, it continues to rely on Aramco’s massive dividend to fund its budget. That dependency is increasingly risky: Aramco’s earnings for the second quarter, expected on 5 August, are projected to fall by nearly 20 per cent to under $24 billion.

Despite the slump, Aramco remains a financial powerhouse. It has some of the lowest production costs in the industry, low debt, and plans to expand its gas operations. Analysts at Goldman Sachs and JPMorgan still recommend buying the stock. But its fall from the top spot—just a few years ago, Aramco was the most valuable listed company in the world—marks a major symbolic shift. At $1.5 trillion, it now ranks behind several US tech giants, including Apple and Microsoft.

For Saudi Arabia, the drop is more than a blow to national pride. It raises urgent questions about the kingdom’s future. As long as the country’s wealth remains tied to oil, global price fluctuations and energy market shifts will continue to dictate its economic outlook, no matter how many promises are made to move beyond fossil fuels.

-MEMO

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