"Portfolio protection" under the Middle East war flames! Saudi Aramco announces $3 billion buyback and increased dividend to boost market confidence.

Saudi Aramco has approved a $30 billion stock buyback plan and increased dividend payments to boost market sentiment after the company's operations were hit by the Middle East conflicts. Following a series of operational setbacks in the past week, Saudi Aramco surprisingly announced a stock buyback, marking the company's first buyback since its massive IPO in 2019, along with an increase in dividends. Previously, Saudi Aramco had cut oil production and closed Saudi Arabia's largest refinery following drone attacks. With the almost complete paralysis of the Strait of Hormuz, the company has been urgently adjusting some export routes. The surge in oil prices may alleviate the impact of production cuts on Saudi Aramco. On Monday, oil prices briefly surpassed $100 per barrel before retreating slightly, with U.S. President Trump suggesting that the Iran war may end soon. The higher dividends will benefit the Saudi government and its sovereign wealth fund, which together hold approximately 97% of Saudi Aramco's shares. Saudi Arabia's economic diversification plan worth trillions of dollars to a certain extent relies on the huge dividends from Saudi Aramco. Since the beginning of the year, Saudi Aramco's stock price has risen by approximately 14%, but lags behind oil giants Shell (SHEL.US), Exxon Mobil Corporation (XOM.US), and Chevron Corporation (CVX.US). BP p.l.c. Sponsored ADR (BP.US) has halted stock buybacks to strengthen its balance sheet, while Shell has maintained stock buybacks. Saudi Aramco, the world's largest oil exporter, announced in a statement on Tuesday that the quarterly basic dividend for the quarter ended December 31 would increase to $21.9 billion, up 3.5% from the previous quarter, in line with analyst expectations. Saudi Aramco also plans to buy back up to 350 million ordinary shares over 18 months starting in March this year. The company's free cash flow in the fourth quarter reached $27.5 billion (funds remaining after deducting investments and expenses), marking the second consecutive quarter in which it has paid out all dividends, which it had failed to do for a long time. Saudi Aramco's net profit in the fourth quarter of 2025 is around $17.8 billion, a decrease of over 20%; adjusted net profit for the quarter is $25 billion, which is in line with the company's median analyst estimate of $24.8 billion. The near closure of the Strait of Hormuz has brought a nightmare scenario to the energy industry, severely disrupting exports. This has led to rapid oil tank saturation, and major OPEC oil-producing countries such as Iran, Kuwait, and the UAE have also begun reducing production.