Saudi Aramco now world's third most valuable company
Saudi Arabia's oil company Aramco closed on Wednesday just
shy of a $2 trillion valuation the kingdom's crown prince has long sought,
buoyed by high oil prices and increased demand for energy as economies recover
from last year's pandemic lockdowns.
Aramco touched the $2 trillion market cap moment during the
day, but ultimately closed at $1.99 trillion, or what is 37.3 riyals ($9.95) a
share. It hasn't reached this peak in trading since December 2019, days after
the company's debut on the Saudi stock exchange.
Aramco now ranks third behind Microsoft and Apple as the
world's most valuable company, far exceeding the combined value of some of the
world's biggest oil companies.
The rally for Aramco comes as Brent crude oil prices climb
to around $82 a barrel, the highest in seven years. Demand for energy is
picking up, despite the ongoing coronavirus' continued toll on travel and other
key gasoline-guzzling sectors.
Aramco, which produces Saudi Arabia's oil and gas, is
closely watched by energy traders and insiders because of both its size and
importance to world energy markets. The company is almost entirely owned by the
government of Saudi Arabia, with just under 2% of Aramco publicly listed on the
Saudi Tadawul stock exchange.
Despite fluctuations in Aramco's yearly earnings, the company
has stuck to its promise to pay an annual dividend of $75 billion until 2024 to
shareholders, the biggest of which is the government.
Crown Prince Mohammed bin Salman was the force behind the
government's effort to publicly list a sliver of Aramco in late 2019, touting
it as a way to raise capital for the kingdom's sovereign wealth fund. He says
the aim is to use that capital to then develop new cities and mega-projects
across the country that create private sector jobs for young Saudis entering
the workforce.
Ultimately, the crown prince is aiming to diversify the
Saudi economy away from its reliance on oil for revenue as talk of energy
transition, climate change concerns and sustainability take on increasingly
urgent global attention.
Aramco produces the kingdom's vast oil and gas products, and
receives directives on supply production each month from the Energy Ministry of
Saudi Arabia, OPEC's lynchpin nation.
Demand for oil is forecast to hit 99 million barrels per day
by the end of the year, and a little over 100 million per day next year.
"We are satisfied that the worst is over," OPEC
Secretary-General Mohammed Barkindo said Wednesday during the virtual Energy
Intelligence Forum.
The oil cartel, led by Saudi Arabia, and other allied major
oil producers. led by Russia. said this week they are maintaining a gradual
approach to restoring production levels that had been slashed during the
pandemic, agreeing to add only 400,000 barrels per day in November.
Their meeting on Monday lasted "a record 25 minutes,"
Barkindo noted.
Also speaking at the virtual Energy Intelligence Forum was
Iraq's Oil Minister Ihsan Ismaeel. He said oil prices that reach $120 a barrel
would be great for his country, which is heavily reliant on oil exports, but he
acknowledged that such a cost is not sustainable. He said a range of between
$75-$80 a barrel would be a "fair price" for both producers and
consumers.
While higher oil prices bode well for some producers, White
House National Security Adviser Jake Sullivan raised concerns about rising
prices when he met with top Saudi officials, including the crown prince, in a
visit to Riyadh last week that focused on a range of issues. The White House
has said it wants to ensure gas prices are kept down for the American public.
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