Aramco provides much of the Saudi government’s income via generous dividends. Image Credit: Shutterstock

Riyadh: Aramco maintained its payout to the Saudi Arabian government and investors at $29.4 billion, helping state finances amid a widening budget deficit.

The world’s biggest crude oil exporter maintained the payout at the preceding quarter’s level despite third-quarter net income dropping 23 per cent to $32.6 billion compared with a year earlier, according to a statement.

Aramco provides much of the Saudi government’s income via generous dividends. The distribution is becoming ever more vital as the kingdom pushes ahead with expensive projects such as the futuristic city Neom, the purchase of high-profile footballers and stakes in sporting leagues.

Lower oil production hit Aramco’s earnings in the quarter. Saudi Arabia is keeping output at around 9 million barrels a day, about 1 million below the average over the past decade, in an effort to boost prices. The levels will remain until at least the end of this year.

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Oil prices have also fluctuated in recent weeks. The market has shrugged off concerns that Israel’s war on Hamas will spill over to the wider region and threaten global supplies. Brent crude is back to where it was before Hamas’s October 7 attack on Israel, at about $85 a barrel. That’s keeping the Saudis and their OPEC+ partner Russia intent on maintaining their unilateral output cuts for now.

There are also signs that the physical oil market is weakening, which could prompt Saudi Arabia to prolong its supply cuts into next year. Demand for fuels such as diesel is softening in Europe in a sign of lacklustre economic growth.

Still, Aramco aims to gradually increase payouts. As part of its new performance-based dividend, the company linked the distribution to free cash flow. Other international oil majors have also have prioritised shareholder returns, with Shell Plc increasing its stock buy-back programme.