Aramco closes gap on Apple in race to be most valuable company

Saudi Aramco, the world’s largest oil-exporting company, has closed the market capitalisation gap with iPhone maker Apple.

Aramco became the world’s most valuable company yesterday after Apple’s shares fell more than 4 per cent.

Aramco traded near its highest level on record yesterday, with a market capitalisation of about $2.43 trillion, passing that of the tech company.

On Tuesday, Aramco briefly passed Apple’s market valuation during the day. Aramco’s shares have jumped almost 30 per cent since January 2. Apple shares in New York dropped to $147.53, giving it a valuation of $2.38tn. The company’s shares have dropped nearly 16 per cent since the start of the year.

“Apple stock has held up better than most peers, it is still subject to the great tech multiple compression, which has been witnessed as a result of central bank tightening and ramping inflation,” Neil Campling, co-head of Mirabaud Securities’ Global Thematic Group, told The National.

“Investors will now worry if consumers’ belt tightening will lead to lower appetite to buy the ultimate consumer accessory, the iPhone.”

Aramco’s market value has been helped by the technology sell-off and the increase in oil prices. Crude prices are up about 60 per cent since last year on higher demand and supply concerns due to limited capacity of producing countries. Last month, Brent and the West Texas Intermediate, the global benchmarks, posted their fifth straight monthly gain.

“Oil prices remain buoyed since the EU proposed a phased embargo on Russian oil. However, the approval has been delayed amid requests from Eastern European members for exemptions and concessions,” Vijay Valecha, chief investment officer at UAE-based financial consultancy Century Financial told The National.

“Once the bloc confirms the ban on Russian oil in its sixth sanctions package, the European

countries will resort to the Middle East to meet their demand for oil … therefore, the market participants are anticipating the embargo and are in turn siding with Aramco.”

Owing to the Ukraine war-related trade and production disruptions, the price of Brent – the global benchmark for two thirds of the world’s oil – is expected to average $100 a barrel this year, its highest level since 2013, after increasing more than 40 per cent annually, according to the World Bank.

Some investment banks estimate oil prices will average between $120 and $135 a barrel this year. Saudi Aramco’s market cap has rallied to $2.45tn from $1.90tn since the start of the year, while Apple’s valuation has fallen to $2.5tn from $2.85tn.

Apple’s stock-market value briefly rose above $3tn on January 3, shattering yet another record, but it failed to hold above the level until the end of the trading day.

Saudi Aramco is the only non-American company in the top 10 market cap rankings. It is followed by Microsoft, Alphabet, Amazon, Tesla, Berkshire Hathaway, Meta, Johnson & Johnson and United Health.

Last year, Microsoft briefly became the most valuable company in the world when Apple missed estimates. But Apple soon reclaimed its top position.

Aramco’s 2021 full-year net profit more than doubled to $110 billion, driven by a 67 per cent surge in oil prices as easing pandemic-related restrictions and improving global economic growth resulted in petroleum demand overtaking supply.

Aramco listed its shares on the Saudi Stock Exchange, Tadawul, in 2019, raising $25.6bn and later selling more shares, boosting the total to $29.4bn.

The company’s shares jumped 10 per cent as it began trading on December 11, 2019, pushing its market value to $1.88tn and anchoring it as the largest public offering globally.

“Saudi Aramco shares are becoming a favourite investment for many traders as the outlook for oil prices remains well supported for the next few years,” said Edward Moya, a senior market analyst at Oanda.