Middle East Oil Giants Rein in Acquisition Spree as Revenue Prospects Dim

Saudi Aramco and Abu Dhabi National Oil Company (ADNOC), two of the Middle East’s largest oil producers, are recalibrating their blockbuster acquisition strategies amid expectations of a sustained downturn in oil revenues. After unveiling more than $60 billion in deals over the past three years, both state-backed giants are shifting focus from global expansion to preserving cash flow and rewarding shareholders with dividends.

Earlier this year, Brent crude traded above $80 per barrel, emboldening executives to pursue deals in gas, chemicals, and lubricants. Saudi Aramco invested around $8 billion in assets such as Rongsheng and Valvoline, while ADNOC announced transactions totaling over $52 billion, including bids for Santos and Covestro and the creation of joint ventures like Borouge Group International.

However, crude prices have softened to the mid-$60 range as global demand growth slows and inventory builds. This shift in the oil market has prompted Gulf state owners to urge their national champions to prioritize financial resilience over dealmaking. Both companies are now considering asset sales and tighter capital discipline to navigate the leaner years ahead.

For Aramco, the pullback means halting new mega-mergers and reassessing its long-term strategy under Saudi Arabia’s Vision 2030. Plans for further LNG investments are under review, and any future moves will be weighed against the need to maintain a healthy free cash flow and meet the kingdom’s fiscal requirements .

ADNOC, having front-loaded its diversification through major deals like Covestro, is pivoting toward integration. The firm’s focus is on optimizing recently acquired assets, streamlining operations at its Borouge plastics venture, and strengthening its balance sheet to sustain planned dividend hikes.

Market analysts caution that the era of cheap capital is over, and oil majors must prepare for higher borrowing costs and investor scrutiny. Credit ratings agencies have already highlighted the risk of weaker commodity prices, which could pressure borrowing costs for Aramco and ADNOC in capital markets .

The acquisition slowdown could tighten the global energy M&A landscape. Smaller firms seeking backing for growth may find fewer willing buyers, while national oil companies elsewhere might seize the opportunity to strike smaller, opportunistic deals during this period of retrenchment.

Investors will watch dividend announcements closely. Aramco plans to sustain a generous payout ratio, although its performance-linked dividends may be trimmed to conserve cash. ADNOC’s dividend commitments are similarly under the microscope, as Abu Dhabi balances its sovereign spending needs.

In the broader market, the scale-back underscores a transition from growth-at-any-cost to a decade of value management. Shareholders may accept fewer dazzling acquisitions in exchange for steadier cash returns, signaling a maturation of Gulf oil majors’ capital allocation strategies.

As Saudi Aramco and ADNOC take a breather from dealmaking, the global oil and gas sector must adapt. The pullback by two of its most powerful players heralds a new chapter: one defined by disciplined spending, robust dividends, and cautious, targeted investments.