Saudi Aramco sees good signs of rising oil demand as stocks hit record high

Saudi Aramco shares hit a record high as its chief executive said demand for oil continued to rebound from the coronavirus pandemic, including in the company’s main Asian market.

“With the global recovery that we are seeing today, there is more demand for products and we are seeing that in different enclaves, especially in Asia,” CEO Amin Nasser said during a speech in Riyadh, the capital. of Saudi Arabia. “There is a recovery in the rest of the world.”

Crude prices have jumped about 20% this year to over US$90 a barrel as consumption increases and many large producers struggle to increase supply. Several traders believe that prices will soon reach US$100.

The stock gained as much as 6.6% to 40.20 riyals, before falling to 4.1% at the close in Riyadh. That pushed its market valuation up from $83 billion to $2.1 trillion, behind only Apple Inc. and Microsoft Corp.

Rising crude is contributing to an acceleration in global inflation and putting pressure on central banks to raise interest rates. US President Joe Biden, keen to ease cost-of-living pressures for Americans ahead of the midterm elections in November, has in recent months called on producers to ramp up production more quickly.

Nasser said part of the problem is the lack of investment in the oil sector. Many energy companies are scaling back new developments as governments and investors push them to cut carbon emissions. Saudi Arabia and the neighboring United Arab Emirates are among the few producers still spending billions of dollars to expand capacity.

Aramco is “on track” to increase crude production capacity to 13 million barrels per day from 12 million by 2027, the CEO separately told reporters. The company will provide more details when announcing its results for the last quarter of 2021.

“There is no adequate investment” in the world to “sustain demand growth in the medium to short term,” Nasser said. Global consumption will likely reach pre-pandemic levels – around 100 million barrels per day – in the first half of this year, he said.

The company has “huge interest” in investing in China, the world’s biggest rough importer, according to Nasser. Aramco has reignited talks to build a multi-billion dollar refining and petrochemicals complex in the northeast of the country, Bloomberg reported earlier this month.


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Aramco shares are up 10% this year, roughly matching Saudi Arabia’s benchmark Tadawul All Share Index. The Tadawul is the sixth best performing gauge in the world this year in US dollar terms and is at its highest level since 2006.

The energy giant “will likely continue to reap the dividends of high oil prices,” said Faisal Hasan, chief investment officer at Al Mal Capital. He expects crude prices to be supported by rising consumption as the pandemic recedes and geopolitical tensions over Ukraine.

Yet as Aramco climbs, its dividend yield is under pressure. It fell to 3.6% on Monday – lower than peers such as Exxon Mobil Corp. and BP Plc. Analysts have previously said Aramco will need to increase its payouts to shareholders, currently set at $75 billion a year, to attract more foreign investors.

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“I won’t be surprised if the company increases its dividend this year,” Hasan said.

The equity gains come as the government, which owns around 98% of the company either directly or through its sovereign wealth fund, considers another share sale. Saudi Arabia raised nearly $30 billion in Aramco’s IPO in late 2019.


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Felix J. Dixon