Saudi Aramco

Stock performance

History

Saudi Aramco began as a concession granted to Standard Oil of California to explore for oil in Saudi Arabia, and the discovery of massive reserves transformed both the company and the kingdom over subsequent decades. The Saudi government progressively nationalized the company between the 1970s and 1980, taking full ownership from its original American founding partners, and it operated for decades purely as a state entity before a landmark 2019 initial public offering — the largest in history at the time — sold a small fraction of shares publicly while the Saudi state retained overwhelming majority ownership and control.

Business model

Aramco explores for, produces, refines, and exports crude oil and natural gas, controlling access to some of the largest and lowest-cost oil reserves in the world, primarily concentrated in Saudi Arabia's Eastern Province. Its extremely low production costs relative to global peers give it exceptional profitability, and as the Saudi state's principal source of revenue, its production and pricing decisions are closely coordinated with broader Saudi government fiscal and OPEC+ policy.

Market position

Saudi Aramco is the largest oil-producing company in the world and consistently one of the most profitable companies globally by net income, given its unmatched combination of reserve scale and low extraction costs. Its production decisions, made in coordination with the OPEC+ group of oil-exporting nations, have significant influence over global oil-price levels, giving it a market position unlike any purely commercial competitor.

Country impact

Saudi Aramco is the single most important company in Saudi Arabia's economy, historically generating the large majority of Saudi government revenue and funding the country's public spending and, more recently, its Vision 2030 economic-diversification program aimed at reducing long-term dependence on oil. Its performance is essentially inseparable from the fiscal health of the Saudi state itself.