Saudi Aramco's financial results and Saudi Arabia's third-quarter budget performance report, released on the same day, revealed a divergence between the company's rising profits and declining government oil revenue recorded in the state budget.
While Aramco's net income rose 34.2% during the first nine months of 2026 to SAR 380.6 billion ($101.5 billion), government oil revenue fell 1.3% over the same period and declined approximately 23% in the third quarter alone.
Comparing the two indicators does not necessarily imply a direct relationship between the company's profits and the revenue flowing into government coffers. Corporate earnings are recognized under different accounting principles from those governing the calculation and collection of government revenue.
The financial relationship between Aramco and the government also involves multiple channels, including taxes, royalties, dividends and offsetting settlements, each with its own payment and collection schedule.
Aramco's Profits and Cash Flows
Aramco reported net income of SAR 380.6 billion ($101.5 billion) for the first nine months of 2026, compared with SAR 283.6 billion ($75.6 billion) in the corresponding period last year, an increase of 34.2%.
Adjusted net income reached SAR 368.9 billion ($98.4 billion), up from SAR 302.3 billion ($80.6 billion) a year earlier.
However, the increase in earnings was not accompanied by a comparable rise in cash generated by the company's operations, according to its financial report.
Cash flow from operating activities totaled SAR 355.8 billion ($94.9 billion), compared with SAR 357.6 billion ($95.4 billion) in the same period last year, remaining largely unchanged.
Aramco attributed this to changes in working capital, which refers to funds tied up in day-to-day operations, including outstanding sales receivables, inventories and amounts owed to or by the company.
These movements limited the extent to which higher earnings translated into operating cash flow.
Meanwhile, free cash flow increased to SAR 221.6 billion ($59.1 billion), compared with SAR 217.3 billion ($57.9 billion) a year earlier.
This metric measures the cash remaining after capital expenditures are deducted from operating cash flow. It benefited from a reduction in capital expenditures to SAR 134.2 billion ($35.8 billion), from SAR 140.3 billion ($37.4 billion) in the comparable period.
Oil Revenue in the State Budget
On the other side of the equation, Aramco's earnings growth was not mirrored by a corresponding increase in government oil revenue.
Ministry of Finance data showed that oil revenue fell 23% year on year in the third quarter to SAR 116.5 billion ($31.1 billion), compared with SAR 150.8 billion ($40.2 billion) in the same period last year.
Over the first nine months of 2026, oil revenue totaled SAR 446.3 billion ($119 billion), down from SAR 452.4 billion ($120.6 billion) in the corresponding period of 2025, representing a relatively modest decline of approximately 1.3%.
By contrast, non-oil revenue increased 8% during the nine-month period to SAR 412.5 billion ($110 billion), helping lift total budget revenue by 3% to SAR 858.9 billion ($229 billion).
In the third quarter alone, non-oil revenue rose 20% to SAR 142.6 billion ($38 billion).
The growth in non-oil revenue therefore helped cushion the impact of declining oil revenue on the government's overall income.
Third-quarter expenditure totaled SAR 343.4 billion ($91.6 billion), against revenue of SAR 259.1 billion ($69.1 billion), resulting in a quarterly budget deficit of approximately SAR 84.3 billion ($22.5 billion).
Why Don't the Figures Move in the Same Direction?
Part of the divergence between Aramco's financial results and government budget revenue stems from the different nature of the figures themselves.
The company's profits are recognized according to its accounting results, while budget figures reflect government revenue actually collected during the reporting period.
Moreover, the government's financial returns from Aramco's operations flow through several channels, including taxes, royalties and dividends, with differences in when these amounts become due and when they are paid.
Accounting profits do not necessarily translate into cash inflows during the same period. Liquidity is affected by the timing of receivables collection, inventory movements and operating payments.
This distinction is also evident in financial transactions between Aramco and the government, which are not limited to direct cash payments but include the settlement of certain mutual obligations through offsets.
For example, Aramco's cash income tax payments fell to SAR 2.8 billion (approximately $747 million) in the third quarter, compared with around SAR 51 billion ($13.6 billion) in the second quarter, as amounts due to the company from the government were settled by offsetting them against its tax obligations.
Under this mechanism, amounts owed to one party are deducted from what that party owes the other, rather than transferring the full amount in cash.
Such offsets affect both the volume of cash payments and the timing of financial transfers between Aramco and the government.
Consequently, government oil revenue does not necessarily move in the same direction as Aramco's financial results, since each is influenced by different factors and accounting mechanisms.
While the company's profits reflect its financial performance during a given period, government revenue recorded in the budget depends on the taxes, royalties and dividends due to the state, as well as the timing of their collection and settlement.
Aramco's profits may therefore increase during a period when government oil revenue is declining.
Overall, the results demonstrate Aramco's continued ability to generate strong profits and maintain substantial cash flows, supporting its capacity to sustain investment and distribute dividends to shareholders, foremost among them the Saudi government.
At the same time, growth in non-oil revenue underscores the importance of diversifying budget income sources to mitigate fluctuations in oil revenue, broaden the sources supporting public finances and advance the Kingdom's economic transformation.
