Despite Q1 profit hit, Aramco shares up on new dividend policy

New payout will be between 50% to 70% of company's annual free cash flow
Despite Q1 profit hit, Aramco shares up on new dividend policy
Aramco shares up on new dividend policy

Saudi Aramco experienced a surge in its shares following the announcement of a new dividend policy, even though its first-quarter income was impacted by lower energy prices. The world’s biggest oil firm stated that its new payout, linked to performance, will be between 50% to 70% of its annual free cash flow, after deducting the base dividend and other amounts, including external investments.

Read more: Aramco announces 19% drop in profits in the first quarter

The Saudi government, which is the largest shareholder in Aramco, aims to use the funds to help finance a shift in the economy away from its present reliance on oil production. However, a recent decline in crude prices may complicate this strategy. Aramco’s net profit fell by almost 20% to $31.88 billion in the first quarter, missing Bloomberg’s consensus expectations due to these declines.

Meanwhile, oil prices dipped slightly, erasing earlier gains as investors kept a watchful eye on the upcoming U.S. inflation data. Brent oil futures fell by 0.71% to $76.89 a barrel, and West Texas Intermediate crude futures dropped by 0.75% to $73.16 per barrel. Markets are still waiting for the latest consumer price index from the U.S., the world’s biggest oil consumer, and trading ranges are expected to remain fairly tight until the figures are released, according to analysts cited by Reuters. Despite this, prices for the year are still considerably lower.

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