Even without increasing dividends, Saudi Arabia’s unexpected oil income exceeds $65 billion

The Saudi government’s oil revenue nearly doubled in the second quarter, despite Aramco’s dividends remaining unchanged.

According to financial statements released on Monday, the oil giant paid the government more than $65 billion for its 94 percent contribution during the second quarter, up from $35 billion the previous year. This money is a combination of dividends, income taxes, and oil production royalties.

Despite efforts to diversify the economy, Saudi crude oil remains the government’s primary source of revenue. Even without increasing payments to Aramco shareholders, the majority of which goes to the government, the higher prices are expected to result in the country’s first budget surplus in nearly a decade.

Aramco pays a concession fee of 80% on Brent crude prices above $100 per barrel, and 45% on prices between $70 and $100, under a system implemented in January 2020. Following Russia’s invasion of Ukraine in March, benchmark futures rose above $100 per barrel and remained above or near that level until the end of July.

Unlike most major oil companies, Aramco maintained annual dividend payments of $75 billion during the 2020 oil crash and subsequent recovery. Some analysts, however, are questioning whether the company will increase its payments later this year.

In an interview with Bloomberg TV, Aarthi Chandrasekaran, investment manager at Shuaa Asset Management, said, “It’s possible that they will raise earnings in the second half.” With Aramco expected to reduce its borrowing ratio, a measure of debt to equity, to its 5% target by the fourth quarter, “they may open the door to a dividend,” according to one analyst.