Aramco: Comprehensive Analysis of Saudi Arabia's Largest Listed Company

Saudi Aramco was established as the main arm of the state to manage oil and gas resources, and since its listing on Tadawul in 2019, it has become the largest joint-stock company in the Saudi financial market in terms of market capitalization. Its stock is symbolized by 2222 and is a fundamental pillar in the Saudi market index (TASI). The company's market capitalization typically exceeds two trillion US dollars, making it one of the largest publicly traded companies globally.

Aramco plays a vital role in the Saudi economy; it is the primary source of the state's oil revenues and significantly contributes to the Kingdom's GDP. Moreover, Aramco's stock performance directly reflects the sentiment of the Saudi financial market, as its weight in the index constitutes a large percentage of the total market capitalization, making stock movements have a profound impact on overall indicators.

The listing of Aramco has provided local and international investors with the opportunity to participate in the profits of the world's largest oil company and has contributed to enhancing the liquidity of the Saudi market and its investment attractiveness, especially with the company's commitment to generous dividend distribution policies and transparency in financial disclosures.

Saudi Aramco is an integrated company in the energy sector, covering all stages of the oil value chain: exploration, production, refining, manufacturing, transportation, and petrochemicals. The government of the Kingdom of Saudi Arabia owns the overwhelming majority of the shares, with a small percentage owned by local and international investment institutions and funds following the initial public offering.

This ownership structure reflects the state's strategy to enhance its control over natural resources while opening the door for private sector participation and international investors within a regulated and structured framework. The listing on Tadawul has allowed Aramco to diversify its funding sources and provide additional liquidity to the state for financing major development projects, in line with Saudi Vision 2030.

Aramco's operational arms include massive projects such as the development of oil and gas fields, investments in the petrochemical sector (especially through its acquisition of 70% of SABIC), in addition to renewable energy projects and carbon capture technologies. This operational integration grants the company significant flexibility in facing global market fluctuations.

In 2024, Saudi Aramco recorded a net profit of 106.25 billion US dollars, a decrease of approximately 12% from the profits of 2023, which exceeded 121 billion dollars. This decline was due to falling global oil prices and increased operational costs in the second half of 2024.

The company's revenues for 2024 amounted to approximately 436 billion dollars, compared to 440.9 billion dollars in 2023, a slight decrease reflecting the company's sensitivity to fluctuations in oil prices and global supply. In terms of production, Aramco maintained a production level ranging between 9.8 and 10 million barrels per day, with proven oil reserves being the largest globally (approximately 260 billion barrels).

It is noted that Aramco's stock experienced price fluctuations during 2024, ranging between 36 and 42 Saudi Riyals, and declined towards the end of the year to around 29-30 Riyals. This volatility is closely linked to global oil price movements and reflects the company's resilience and response to international economic changes.

Aramco's stock, traded under symbol 2222 on the Saudi Tadawul market, is considered one of the most influential stocks in the Saudi market index due to its massive size and market value, which often exceeds two trillion US dollars. In 2024, the stock price fluctuated within the range of 36-42 Saudi Riyals before declining to around 29-30 Riyals by the end of the year, affected by the company's profit decline and falling oil prices.

In terms of the price-to-earnings (P/E) ratio, it reached approximately 22-23 by the end of 2024, which is relatively low compared to other sectors, reflecting the stability of the company's profits and its financial strength. Regarding cash distributions, Aramco is committed to distributing at least 75% of its net profits annually, providing the stock with a dividend yield ranging between 4% and 5% depending on stock prices, which is among the highest in the Saudi market.

It is worth noting that the high liquidity and large stock volume make Aramco's stock a primary choice for institutional investors and local and global index funds.

Aramco is characterized by a generous and transparent dividend distribution policy, making it a focal point for investors seeking stable periodic returns. The company is committed to distributing at least 75% of its annual net profits to shareholders, with distributions typically made on a semi-annual or annual basis. In 2024, the company announced dividend distributions exceeding 60 billion dollars for the second half of the year, in addition to previous distributions for the first half.

This generosity in distributions reflects Aramco's strong cash flow and contributes to stimulating liquidity in the Saudi financial market, especially since a large portion of these profits goes to the public treasury, supporting the financing of major national projects. The cash yield per share ranges between 4% and 5% depending on the stock price, which is among the highest in the Saudi market, attracting a wide range of investors seeking stable income.

However, the value of distributions is linked to the company's annual performance and oil price fluctuations, meaning that returns may change from year to year depending on economic and financial conditions.

Aramco's stock ranks at the top of the listed stocks in the Saudi financial market index (TASI) in terms of relative weight, constituting a significant percentage of the total market capitalization of the index. This large weight means that stock movements have a direct impact on the performance of the market index as a whole.

When Aramco's stock price rises, it clearly reflects on the rise of the overall index, and vice versa when the stock falls. This is attributed to the company's massive market capitalization, which often exceeds two trillion dollars, representing more than 10% of the total trading value.

This pivotal role of Aramco's stock makes it a key benchmark for trends in the Saudi market and indirectly influences the sentiment of local and foreign investors. Any changes in the company's policies or financial results often have wide-ranging implications for the rest of the market and other listed companies.

Aramco's activities belong to the oil, gas, and energy sector, which is the most sensitive to global economic and political changes. The company occupies the heartbeat of this sector in the Kingdom and is one of the largest producers and exporters of oil globally.

In terms of competition, Aramco faces other national oil companies in the Gulf (such as UAE's ADNOC), in addition to international energy giants like ExxonMobil, Chevron, Shell, and BP. However, Aramco stands out with its massive reserves and low production costs, giving it a competitive advantage during times of rising oil prices and making it less susceptible to risks compared to some competing companies.

Aramco is also working to diversify its income sources by investing in petrochemicals (through SABIC) and renewable energy, in addition to developing carbon capture technologies, enhancing its ability to face future challenges associated with the global shift towards clean energy.

Aramco's results and profits are directly affected by fluctuations in global oil prices, given the company's heavy reliance on crude oil sales revenues. In 2024, the decline in oil prices in the second half led to a 12% drop in the company's profits, which reflected on the stock price and market value.

Multiple factors control oil prices, including global supply and demand, geopolitical policies, OPEC+ decisions, and major economic trends. Therefore, Aramco is very sensitive to these variables and continuously works on developing strategies to adapt to market fluctuations, whether by diversifying products or enhancing operational efficiency.

Despite this, the company remains capable of achieving high profits even in low price environments, thanks to its large reserves and low production costs, granting it a strong competitive edge in facing fluctuations.

Aramco plays a pivotal role in achieving the goals of Saudi Vision 2030 by financing massive infrastructure projects and developing new sectors. The company focuses its future strategy on developing the natural gas sector (such as the Jafurah field project), expanding petrochemical production through SABIC, and investing in clean energy and green hydrogen technologies.

Aramco's profits contribute to financing major projects such as NEOM City, The Line project, and renewable energy initiatives, making it a cornerstone in the Kingdom's economic transformation towards diversifying income sources and reducing dependence on oil. The company also adopts research and development programs to reduce carbon emissions and employ the latest technologies in energy production.

These projects reflect Aramco's strategic direction in maintaining its leadership position and preparing for global transformations in energy markets.

Saudi Aramco faces several strategic challenges and risks, foremost of which are fluctuations in global oil prices, which directly affect the company's profits and government liquidity. Additionally, the global shift towards reducing dependence on fossil fuels and transitioning to clean energy imposes long-term pressures on the company.

Other risks include geopolitical factors that may affect the company's exports, changes in global oil demand, and increasing competition from alternative energy sources. Nevertheless, Aramco enjoys strong competitive advantages such as its massive reserves, low production costs, and strong financial position, enabling it to face risks and continue leading the global energy market.

The company continuously works to enhance its operational resilience, diversify its income sources, and develop new projects to ensure the sustainability of its profits in the long term.

In 2024, there were many significant developments regarding Aramco's performance and strategic directions. The company recorded a 12% decline in net profits compared to 2023 due to falling oil prices and increased operational burdens. It also announced massive dividend distributions exceeding 60 billion dollars for the second half of the year, reflecting its commitment to generous distribution policies despite challenges.

In the last quarter of 2024, Aramco resorted to issuing international bonds worth over 10 billion dollars, an unprecedented move aimed at enhancing liquidity and financing distributions and national projects. The company also continued investing in clean energy projects and signed consulting contracts for natural gas development and hydrogen technologies within the framework of Saudi Vision 2030.

Aramco maintained stable to positive credit ratings from global rating agencies, reflecting investor confidence in the company's ability to generate strong cash flows and maintain distributions despite market pressures.

The evaluation of Aramco's financial performance is based on a set of key indicators, most notably:

- Profitability: The net profit for 2024 was approximately 106.25 billion dollars, with a strong profit margin despite the decline from 2023.
- Revenues: The company recorded approximate revenues of about 436 billion dollars in 2024, with continued high operating cash flow.
- Price-to-Earnings (P/E) Ratio: The ratio reached around 22-23, which is relatively low and reflects the strength and stability of profits.
- Dividend Yield: Ranged between 4% and 5%, among the highest in the Saudi market.
- Market Capitalization: Remained above two trillion dollars for most of 2024, making the company the largest in both local and global markets.

These indicators reflect the robustness of Aramco's financial position and its ability to achieve sustainable returns while maintaining operational flexibility in a volatile market environment.

When comparing Saudi Aramco with other major oil companies such as ExxonMobil, Chevron, Shell, and BP, it is clear that the company excels in terms of proven reserves, low production costs, and the massive size of revenues and profits.

Aramco faces direct competition from national oil companies in the Gulf (such as ADNOC) and major Asian energy companies (such as CNPC and Sinopec), especially in export markets and trade exchanges. Nevertheless, Aramco remains a leader in oil production and a primary source of government income in Saudi Arabia, granting it a unique position among its peers.

The company continuously seeks to enhance its leadership through investments in petrochemical projects, renewable energy, and the development of advanced technologies to reduce emissions, thereby enhancing its ability to adapt to future transformations in the energy market.