NEW YORK, January 1, 2026, 17:25 ET
Saudi Arabian Oil Co, better known as Saudi Aramco (2222.SE), enters 2026 after its shares fell 15.04% in 2025, the stock’s worst annual drop since its December 2019 IPO, amid weak oil markets and rising regional tensions. Saudi Arabia’s benchmark ended the year about 13% lower, and Milad Azar, a market analyst at XTB MENA, said the market may rebound in 2026 as monetary policy eases and interest rates decline, but “key risks could remain oil and global growth.” 1
Saudi Arabia’s Tadawul All Share Index (TASI), the main benchmark, rose 0.6% on Thursday in the first session of the year. The early gains are sharpening the focus on whether Aramco’s payouts can anchor sentiment in 2026 after the previous year’s selloff. 2
Oil prices set the tone for Aramco’s 2026 trade. Brent crude futures fell about 19% in 2025 and settled at $60.85 a barrel on Dec. 31, while U.S. WTI ended at $57.42, down almost 20% on the year. BNP Paribas commodities analyst Jason Ying expects Brent to dip to $55 in the first quarter before recovering to around $60 for the rest of 2026; OPEC+ — OPEC and allies including Russia — has paused output hikes for the first quarter after releasing about 2.9 million barrels per day into the market since April, and most analysts expect supply to exceed demand next year. 3
In a Dec. 8 report, Fitch Ratings affirmed Aramco’s long-term issuer rating at A+ with a stable outlook and said its rating-case assumes no performance-linked dividends for 2026-2028. Fitch’s key assumptions include an oil price of $63 a barrel in 2026 and base dividends rising 4% a year, and it said Aramco should remain less leveraged than peers Shell and BP. Fitch also said Saudi Arabia owns 81.48% of Aramco directly and another 16% through the Public Investment Fund, and it expects oil revenue to make up 54% of government budget revenue in 2025. 4
Aramco’s investor relations site shows an ordinary dividend of 0.3278 riyals a share for 2025’s third quarter, alongside a performance-linked dividend of 0.0034 riyals classified as fiscal 2024. The schedule underscores how small the variable payout has become compared with earlier periods of stronger cash generation. 5
Performance-linked dividends are the variable part of Aramco’s payout, paid on top of the base dividend and tied to business performance. Investors watch free cash flow — cash left after capital spending — because it is what ultimately funds dividends, debt service and future investment.
That is why Aramco’s 2026 forecast has narrowed to a few drivers: crude prices, dividend visibility and spending discipline. A firm base dividend can support the stock, but weaker oil prices tend to compress cash generation and limit flexibility.
Lower interest rates typically support equity valuations by reducing financing costs and making dividends more attractive relative to cash. For Aramco, that tailwind can help, but it does not remove the dependence on oil prices.
The upside case for Aramco shares in 2026 rests on crude stabilising around levels that keep cash flows predictable and allow dividends to stay steady. Any sign that the variable dividend is returning meaningfully would be watched closely by income-focused investors.
The downside case is simpler: sustained pressure on crude prices tightens the cash available for distributions and raises the risk that payouts disappoint. That dynamic can weigh on valuation even if the company keeps the base dividend intact.
Policy also matters. Aramco sits at the centre of Saudi Arabia’s economic strategy, and production decisions can reflect national priorities as well as market conditions.
Geopolitics adds another layer of volatility, leaving the shares sensitive to abrupt swings in crude even when the market is focused on oversupply.
After a punishing 2025, the Aramco stock forecast for 2026 now hinges on whether oil can hold near levels embedded in many scenarios and whether dividends stay predictable. If it does, payouts may provide a floor for the shares; if not, expectations for any variable distribution may fade further.
