Oil & Gas

Saudi Aramco raised dividends by 30% in 2023, despite a drop in profits due to an 18% decrease in the average price per barrel of Brent crude oil. This decision, which may seem surprising, reflects the company's commitment to its shareholders and its efforts to maintain financial stability amidst challenging geopolitical and economic circumstances.

The company's dividend increase is closely tied to its failed initial public offering (IPO) in 2016, which aimed to raise funds to offset losses from the 2014-2016 Oil Price War and diversify the Saudi economy. However, international investors were skeptical, citing concerns about the company's oil reserves, production capabilities, and future decision-making processes. As a result, Saudi Aramco struggled to attract investors and ultimately sold only a fraction of the intended 5% stake.

The fallout from the failed IPO, combined with Saudi Arabia's strained relations with the U.S. and its increased reliance on Russia, has put pressure on the kingdom to maintain higher oil prices. This has led to a delicate balancing act for Saudi Arabia, as it navigates its relationships with major oil players and tries to avoid further economic and political repercussions.