The 2025 oil market was a chaotic game of musical chairs.
According to the International Energy Agency (IEA), the US, Guyana, and Brazil went into overdrive, dumping an extra 1.4 to 1.8 million barrels a day onto the market. Meanwhile, China ghosted the global oil demand growth it had historically driven, due to a stalling economy and a 35% surge in EV sales.
Geopolitical flares in the Middle East caused a spike in prices, rising toward the $120 mark. However, investors remained bearish, fearing a massive oversupply and G7 reserve dumps, as per the IEA.
This left a titan like Saudi Aramco staring down a seriously rough scorecard. Despite their official line about "record demand," the reality was a 14% nosedive in the cash they’d pulled in per barrel—dropping from a comfortable $80.20 down to $69.20, as per the Aramco 2025 Annual Report. They’re choosing to reinvent the playbook by pouring those billions into a massive strategic shift.
Aramco is pivoting hard toward gas and tech while keeping its core oil biz "lean and mean." They’ve set a massive $50bn to $55bn budget for 2026 to make it happen, with a major goal to crank up gas production by 80% by 2030 compared to 2021 levels. They’re also obsessed with AI; now, they’re doubling down for 2026, even eyeing a minority stake in the AI firm HUMAIN to keep that momentum going.
Rough patch
Aramco’s total hydrocarbon production volume stayed somewhat flat, staying at 12.9 mmboed, up from 12.4 mmboed in FY 24. Liquids played a big part in that growth, climbing to 10.7 mmbpd from 10.3 mmbpd in the previous year. Gas production jumped 5.5%, hitting 11.4 bscfd compared to the previous 10.8 bscfd.
It comes as no surprise that Aramco’s 2025 performance was a bit of a mixed bag, mostly because the market wasn't doing them any favors. Revenue took a 7.2% hit, dropping to SAR 1.67 trillion ($445.7bn) from SAR 1.80tn ($480.4bn) in 2024. The main culprit? Yes, the 14% slide in crude oil prices. Cheaper refined and chemical products also dragged the bottomline.
On the profit side, Net Income came in at SAR 350.2bn ($93.4bn), down from SAR 398.4bn ($106.2bn) in 2024. In some small joys, free cash flow stayed virtually flat at SAR 320.4bn, compared to 2024’s SAR 320 bn.
Revving up?
Aramco’s stock is holding steady at SAR 26.9, up 0.86% over the last year and hovering just under its 52-week high of SAR 27.5. With a massive SAR 6.5tn ($1.7 trillion) market cap, it’s still a global heavyweight.
Valuation-wise, its 2026 P/E ratio of 17.6x is slightly pricier than its 17.1x three-year average, but the dividend game remains strong—yields may clock at 5.1% in 2026 and jump to 5.6% by 2028. 8 out of the 18 analysts who watch the stock have “Buy” ratings on it, with the other 10 on “Hold”, placing the average target price at SAR 28.4 ($7.58), leaving a 5.3% spread from where it is now, suggesting there's still some decent upside.
Reality check
Investing in Saudi Aramco comes with hurdles. Right now, the biggest elephant in the room is geopolitical instability. The ongoing conflict between the US, Israel, and Iran is a massive headache for Saudi Aramco. Since Iran blocked the Strait of Hormuz, it is choking Saudi crude exports and forcing production cuts of millions of barrels per day, leaving the company a tough spot. Iranian strikes on its Ras Tanura refinery and Yanbu port have also caused physical damage. What we are trying to say is: this current war could further impact its bottom line, so we will have to be in wait and watch mode.
Beyond the physical risks, there’s a massive headache of supply chain chaos. With tensions in the Strait of Hormuz, Aramco is facing major shipping bottlenecks that force expensive rerouting and put a dent in exports to huge buyers like China. On top of that, there’s oil price volatility and the long-term shift toward renewables. Since the Saudi government holds the reins, their national and political goals will usually take priority over the interests of shareholders.
