The oil company Saudi Aramco is benefiting greatly from the high oil prices and has doubled its quarterly profit to almost 40 billion dollars. The Saudis have now risen past Apple to become the most valuable company in the world.
The state-controlled oil giant Saudi Aramco (formerly: Arabian-American Oil Company) has posted the best results since its IPO in 2019 at the beginning of the year. Aramco, like its peers Shell and BP, has benefited from record oil prices, which are soaring largely because of Russia’s incursion into Ukraine.
The group made a profit of $39.5 billion in the first quarter, according to a statement on Sunday. It has thus exceeded the previous year’s value by 82 percent.
Invested heavily in oil production
However, it was not only the roughly 45 percent increase in the price of oil that was responsible for the jump in profits for the world’s largest oil producer. The reason for the sharp increase in income is also the fact that, unlike its competitors, Aramco is investing heavily in oil production. Most other oil companies are trying to reduce their greenhouse gas emissions and turn to alternative energies.
Between January and March, the Saudi kingdom’s crude oil production increased to an average of 10.2 million barrels per day. That is 20 percent more than a year ago. And the production volume is set to increase further. Aramco is investing significant funds to boost oil production by 1 million barrels to 13 million barrels per day by 2027.
The Saudis mainly blame the decline in global investment for the current price hike. Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview that the refining crisis is causing the gap between crude oil and refined fuel prices to widen. The bottleneck is now at the refineries. Numerous companies, especially in Europe and the USA, have closed in recent years. “The world is running out of energy capacity at all levels,” Salman said. Aramco announced that it would continue to expand its downstream activities, especially at the refinery, trading and chemical subsidiary Sabic.
But Saudi Arabia has also been trying to become less dependent on oil for a number of years. At the end of 2019, the state sold a small part of Saudi Aramco via an IPO and raised over $29 billion at the time, which flowed into other major projects.
Now ahead of Apple the most valuable company
Just last week, Aramco snatched the crown of the company with the world’s highest market capitalization from the American Apple group. The Arab company’s share price has shot up by almost a third since the beginning of the year.
Apple, on the other hand, is almost a fifth cheaper. Aramco’s stock market value is $2.42 trillion. The market capitalization of the American technology group Apple, on the other hand, fell to $2.37 trillion.
Apple’s shares are suffering from the current bad mood on the stock market in relation to technology stocks. The rising interest rates are harming the tech companies across the board, as many companies in this industry are highly indebted.