Two of the Middle East’s most powerful energy companies, Saudi Aramco and the Abu Dhabi National Oil Company (Adnoc), are hitting the brakes on their multibillion-dollar acquisition strategies as falling oil prices force a reassessment of global dealmaking, according to a detailed report by the Financial Times.
Together, the two state-owned oil titans have spent over $60 billion in recent years on a spree of global acquisitions, aiming to diversify into gas, chemicals, and lubricants. But with benchmark crude prices tumbling from over $80 a barrel in January to just $67 this week, both companies are now slowing their mergers and acquisitions (M&A) activity.
The Financial Times cites advisers and insiders who say the Gulf giants are under pressure from their government owners to shift their focus away from aggressive expansion and toward ensuring stable dividend payouts. A senior energy banker noted the directive: “focus more on dividends and less on growth.”
The fall in oil prices—now below break-even levels for several Gulf countries—is beginning to constrain spending. Saudi Arabia has publicly signaled a more cautious stance, with officials indicating they would “take stock” of expenditures given current market conditions.
“In any uncertain environment, there’s a need to be more selective,” one executive told the Financial Times, adding that Saudi Aramco’s earnings fluctuate by roughly $900 million for every $1 change in oil prices. The impact of a slowdown from the Gulf’s biggest players could reverberate across the global energy sector, where their aggressive dealmaking had become a dominant force.
Saudi Aramco has announced at least $8 billion in acquisitions over the past three years, including high-profile deals such as its stake in China’s Rongsheng Petrochemical, the purchase of U.S. lubricants brand Valvoline, and investments in LNG assets like MidOcean and Woodside Energy’s Louisiana project. Aramco has also been exploring ways to ramp up LNG exports to India.
Despite the shifting environment, Aramco CEO Amin Nasser recently emphasized the company’s ability to “invest counter-cyclically,” while acknowledging the need to enhance spending efficiency in response to falling oil prices.
Adnoc, meanwhile, has been even more aggressive. The company is working on more than $52 billion worth of transactions, according to Dealogic. These include an $18.7 billion bid for Australian oil and gas producer Santos, a $15.5 billion offer for Germany’s Covestro, and a major stake in the newly formed $60 billion chemicals conglomerate Borouge Group International.
To support this global expansion, Adnoc has built an “internal investment bank” and launched XRG, a platform dedicated to international acquisitions. In June, XRG publicly declared ambitions to rank among the world’s top-three chemical companies and top-five gas players. It also plans to focus on expanding into the U.S. under the second Trump administration.
Still, sources close to Adnoc told the Financial Times that the company now needs time to integrate its many acquisitions and assess the viability of future deals given market volatility. Neither Aramco nor Adnoc is bidding for BP’s lubricants brand Castrol, a signal that dealmaking priorities are shifting.
One prominent energy lawyer likened the current moment to the wave of Chinese state-owned overseas acquisitions between 2009 and 2013, noting that Aramco and Adnoc may now be entering a phase of reflection. “They don’t want to be seen as the dumb money,” the lawyer said.
Both Saudi Aramco and Adnoc declined to comment on the matter.
As oil prices remain under pressure and geopolitical uncertainty clouds the outlook, even the most deep-pocketed energy players are being forced to recalibrate. The Financial Times analysis suggests that while growth ambitions remain, prudence and strategic focus will now define the next chapter for the Gulf’s energy powerhouses.
