Saudi Aramco Stock

Interested in investing in Saudi Aramco stock? Here’s everything you need to know about the company before buying stock.

Saudi Aramco, officially known as the Saudi Arabian Oil Company, is the world's most productive oil company. Listed on the stock exchange on December 12, 2019, it is also the world's largest in terms of market cap.

If you are interested in Saudi Aramco stock, we suggest you take a look at this article to find out more about the company's stock market and financial activities, including its capitalization, development potential and sales evolution.

History of Saudi Aramco

On May 29, 1933, the Saudi government signed a concession agreement with Standard Oil of California (Socal). This agreement led to the management of the concession by a subsidiary of Socal, California Arabian Standard Oil. This marked the beginning of many years of research to find an oil deposit large enough for commercial exploitation.

The well, known as "Damman number 7", was not found until 1938. The following year, Saudi Arabia exported crude oil for the first time. In 1994, California-Arabian Standard Oil Company became Arabian American Oil Company (Aramco).

In 1973, the Saudi government acquired 25% of Aramco, then 60% in 1974, and finally took full control in 1980. In 1988, the name of the company was changed to Saudi Arabian Oil Company, now Saudi Aramco.

Introduction and listing of Saudi Aramco shares

Saudi Aramco is an oil sector giant. Saudi Amarco shares were listed on the Riyadh Stock Exchange on December 12, 2019. The IPO price was initially set at SAR 35.20. It then rose to SAR 38.70, an increase of over 10% from the IPO. The interest then gradually waned with a steady decline and finally closed at SAR 38.80 (an increase of 4.55% over the IPO price).

The volumes that circulated today were spectacular as no less than 417.9 million shares were traded, equivalent to $4.16 billion.

The other major event on the day of its IPO was a commitment made by Saudi Aramco. The company committed to paying a minimum of $75 billion in dividends between 2020 and 2024. In addition, if annual dividends are less than $75 billion, dividends to non-government shareholders will always be given priority.

Factors that affect Saudi Aramco share prices

There are several factors that can affect the Saudi Aramco share price.

First of all, changes are afoot in the commodities market and more specifically oil. If you decide to invest in this stock, it is therefore necessary to keep informed of the decisions of OPEC as well as any other news that could affect the price of oil. Secondly, developments in the activities of Saudi Aramco's competitors will also affect its share value. 

Alongside the factors mentioned above, you also have to pay special attention to the decisions taken by the group, such as partnerships, the creation of joint ventures, buyouts and divestitures. At the same time, remember to analyze the company's annual and quarterly financial results to get a clearer picture of its growth.

Saudi Aramco's main competitors

Saudi Aramco is currently the number one oil company in the world. But that doesn't mean it doesn't have competitors, far from it. These main competitors include:

  • Sinopec, i.e the number 2 oil company sector despite its low production rate. The company’s success is mainly due to the fact that it specializes in refined products such as fuels. It produces 1.6 million barrels per day.
  • China National Petroleum, the third largest in the sector, producing up to 4.4 million barrels per day.

Other major competitors include BP, Total, Lukoil and Royal Dutch Shell.

Information on Saudi Aramco's revenues

Saudi Aramco's revenue grew by more than 35% between 2017 and 2018, from $264.17 billion to $355.94 billion. The profit achieved before taxes was then $224 billion. These constitute the largest profits on the planet.

In 2019, the company's revenue was down 20% with only $88.2 billion in profit. The coronavirus pandemic, which began in 2020, led to a collapse of oil consumption and did not help matters. In August 2020, Saudi Aramco announced that its first-half profits had seen a 73.4% drop compared to its profits during the same period in 2019.

Thus, company revenue was $6.6 billion in 2020 compared to $24.7 billion in 2019 in the second half of the year. We will likely have to wait for a recovery in oil demand to see an increase in Saudi Aramco's results.