Saudi oil giant Aramco's first quarter net profit dropped 19% from a year earlier to 119.54 billion riyals ($31.88 billion), it said on May 9, due to lower crude prices.

Profit still beat analysts' median forecast of $30.8 billion, according to Refinitiv data, and Aramco said the decline was partially offset by lower taxes including in the zakat Islamic tax and a rise in finance and other income.

Net profit was 3.75% higher than in the fourth quarter.

Yousef Husseini, head of materials at EFG Hermes Research, said there was no material surprise in Aramco's results, "with the company performing in line with its ability at prevailing oil prices and taking into account production cuts."

"But, the real positive surprise, which we think will be well received by the market, is that Aramco finally decided to up its dividend policy and include a clear link to its performance."

Aramco's shares closed the day up 3.2% at 33.6 riyals a share after rising as much as 7.2% earlier in the session.

Aramco said it will pay $19.5 billion in dividends for the first quarter, in line with the previous quarter.

CEO Amin Nasser said in a statement that Aramco was looking at introducing performance-linked dividends, in addition to its base distribution. The additional payouts would target 50%-70% of annual free cash flow, net of the base dividend and other amounts including external investments, the company said.

The world's top oil exporter made a record profit of over $161 billion for 2022 on higher energy prices and production.

Last month, Saudi Arabia and other OPEC+ producers announced surprise oil production cuts from May, initially driving up prices, but global economic uncertainty and an unclear demand outlook continue to weigh on prices.

Crude petroleum and natural gas contributed 32.7% of Saudi Arabia's gross domestic product last year, with petroleum refining making up another 6%.

The kingdom's oil revenue slipped 3% in the first quarter to 178.6 billion riyals while non-oil revenue was up 9%.

The production cuts and lower oil prices are expected to weigh on Saudi growth, with the IMF projecting GDP growth to more than halve this year to 3.1% from 8.7% in 2022, among the highest in the G20.

Aramco reached deals to expand its downstream business abroad in the first quarter, including investments in China and completing a $2.76 billion acquisition of Valvoline Inc's products business.

"We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future," Nasser said.

The company's compression projects at the Haradh and Hawiyah fields are expected to begin initial production and achieve full capacity during 2023, it said.