Aramco Cut Its Dividend in 2025 — Then Profits Surged in 2026. It Held the Cut Anyway.

Saudi Aramco cut its dividend for the first time since going public in March 2025, slashing its expected annual payout by roughly 30% — from $124.2 billion in 2024 to $85.4 billion for 2025 — as lower oil prices squeezed profits (Bloomberg). That was the headline at the time. What's happened since is the more interesting part of the story.

Profits Roared Back in 2026 — But the Dividend Didn't Follow

Oil prices surged in 2026 as the US-Iran conflict over the Strait of Hormuz disrupted supply, and Aramco's results followed. The company posted adjusted net income of $33.4 billion for the second quarter of 2026, up 33% year-over-year and ahead of analyst expectations, as crude averaged roughly $108 a barrel during the quarter — more than 60% higher than the $67 average in the same quarter a year earlier (CNBC). Upstream earnings climbed 14% year-over-year, and downstream earnings roughly doubled.

Despite that profit surge, Aramco kept its quarterly dividend essentially flat at $21.9 billion, in line with prior quarters. The company's full-year 2026 dividend guidance sits at about $87.6 billion — only marginally above 2025's $85.5 billion, and still 30% below the 2024 peak (Yahoo Finance).

Why Aramco Isn't Restoring the Bigger Payout

The gap between Aramco's profits and its dividend commitments points to a deeper cash flow tension. For the first six months of 2026, Aramco's cumulative free cash flow totaled $30.9 billion — but its base dividend payments over the same period reached $43.8 billion, meaning the company paid out more in dividends than it generated in free cash flow. That disconnect suggests Aramco's board is treating the 2025 cut as a durable reset rather than a temporary response to a weak quarter, likely to preserve balance-sheet flexibility for ongoing capital spending commitments even as oil-driven profits recover.

What This Means for Investors

The lesson for Aramco shareholders is that the 2025 dividend cut wasn't simply a reaction to one bad stretch of oil prices that would reverse once conditions improved — it's held even through a genuine profit surge. That's a meaningful shift from Aramco's historical pattern of maintaining its dividend through profit swings to preserve its reputation as one of the world's most generous payers. Investors who bought Aramco specifically for its dividend yield should treat the reduced ~$85-88 billion annual run-rate as the new baseline rather than assuming a return to 2024's $124 billion level, even with oil prices elevated by the ongoing Gulf conflict.

What's Still Driving Aramco's Results

The Strait of Hormuz conflict remains the dominant swing factor for Aramco's near-term profitability, given how directly it's been moving oil prices throughout 2026 — Brent has swung from around $92 in early March to over $106 in April and back to around $104 by mid-September as the conflict has repeatedly escalated and de-escalated. That volatility cuts both ways for Aramco: higher average prices support profits and cash flow, but the underlying disruption also reflects real geopolitical risk to Saudi Arabia's own energy infrastructure and export routes.

FAQ

Why did Saudi Aramco cut its dividend? Aramco cut its expected annual dividend by about 30%, from $124.2 billion in 2024 to $85.4 billion in 2025, after lower oil prices squeezed profits — the company's first dividend cut since its 2019 IPO.

Did Aramco's profits recover in 2026? Yes — Q2 2026 net income rose 33-44% year-over-year to roughly $32-33 billion, driven by oil prices averaging about $108 a barrel amid the US-Iran conflict over the Strait of Hormuz, more than 60% above the prior year's quarterly average.

Did Aramco restore its dividend after profits recovered? No. Despite the profit surge, Aramco kept its dividend essentially flat, with full-year 2026 guidance of about $87.6 billion — only marginally above 2025 and still 30% below the 2024 peak.

Is Aramco's dividend sustainable at current levels? It's under some pressure — in the first half of 2026, Aramco paid out $43.8 billion in dividends against just $30.9 billion in free cash flow, meaning payouts currently exceed what the company is generating in cash.

Should investors expect Aramco's dividend to return to 2024 levels? Not based on current guidance. The company appears to be treating the 2025 cut as a lasting reset rather than a temporary response to weak oil prices, even with 2026 profits running well above 2025 levels.

What's the biggest risk to Aramco's near-term results? The ongoing US-Iran conflict over the Strait of Hormuz, which has driven repeated oil price swings throughout 2026 and represents both an upside driver for profits and a geopolitical risk to Saudi Arabia's own energy infrastructure.