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From Youssef Saba

March 10 (Reuters) - Saudi Aramco, the world's largest oil exporter, said its annual profit fell 12 percent due to lower crude oil prices but will repurchase up to $3 billion worth of shares in its first-ever buyback.

The buyback program will be implemented over 18 months. Until now, the company has relied on its large dividend payouts to satisfy shareholders.

The results come at a time of extreme volatility in global oil markets, as the US-Israeli war on Iran has led to the near-closure of the Strait of Hormuz and forced a number of producers in the region to reduce production.

Brent crude, which surged to nearly $120 a barrel on Monday, is trading at around $93 on Tuesday.

Aramco reported net income of $93.4 billion in 2025, lower than the London Stock Exchange Group's estimate of $95.6 billion.

In the fourth quarter, net profit fell 20.5 percent to nearly $17.8 billion due to higher operating costs, marking Aramco's twelfth consecutive quarter of year-on-year profit decline.

Aramco confirmed a basic dividend of $21.1 billion for the fourth quarter and $219 million in performance-related dividends, a mechanism calculated based on free cash flow that was introduced after the huge profits achieved in 2022 following the outbreak of war in Ukraine.

Total dividend payouts for the full year 2025 amounted to $85.5 billion, down from $124 billion in 2024.

Aramco has long been a major source of income for Saudi Arabia, which relies on fossil fuels for more than half of its government revenue. The kingdom directly owns approximately 81.5 percent of the company, while its sovereign wealth fund, the Public Investment Fund (PIF), owns another 16 percent.

Total annual revenue fell 7.2 percent to $415.8 billion, due to lower prices for crude oil, refined products and chemicals.

Aramco also stated that its debt ratio decreased to 3.8 percent by the end of 2025, compared to 4.5 percent by the end of 2024.