Ever dreamt of being an oil tycoon? That ship has most likely sailed, but investing in oil and gas exploration companies is still a possibility. And you might be wondering if you can invest and buy shares in the world’s largest energy firm, Saudi Aramco.
We’re going to cover all the basic details about this company that pumps out over 12 million barrels of oil a day, and what you should be aware of if you’re looking to buy Saudi Aramco shares. We’ll also dig into plenty of information you may not know about the business, its revenue, and how it compares to other energy stocks.
What is Saudi Aramco?
Sometimes it goes by its full name, “Saudi Arabian Oil Group”, or the short and simple “Aramco”. But they all refer to the same company. Saudi Aramco is a public oil and gas company based in Dhahran, Saudi Arabia.
It’s one of the largest companies in the world in terms of market capitalisation, which is why you’ll see plenty of people talking about it. It’s also one of the most profitable companies to ever exist.
The majority shareholder of Saudi Aramco is the government of Saudi Arabia. Saudi Aramco went public in December 2019 and its initial public offering (IPO) was one of the largest to ever take place. Even though this opened up more ownership opportunities for some, the Saudi Arabian government maintained most of its shares.
In most cases, no. The only people eligible to buy shares in Saudi Aramco are Saudi nationals, GCC nationals, and certain foreign nationals who reside in Saudi and have a bank account or investment portfolio with a registered bank. There are also exceptions for billionaire investors.
If you don’t happen to be a Saudi national or a billionaire, your options for buying Saudi Aramco shares get significantly slimmed down into a much smaller pipeline.
How to buy shares in Saudi Aramco
- Move to Saudi Arabia or become a high net worth investor. This is an unlikely path for most and you’re probably better off staying put.
- Invest using a CFD. You can use contracts for difference (CFDs) on platforms like eToro to invest in the price movement of Saudi Aramco. But this comes with added risk and you won’t actually own any stock.
- Look for alternative investments. If you’re hoping to invest in energy companies, there are plenty of options that are much more accessible and less risky.
Alternatives ways to invest in Saudi Aramco
If you live in the UK and haven’t quite yet amassed enough wealth to become an institutional investor, here are some indirect ways you can invest:
- Exchange-traded funds (ETFs). It is possible to use ETFs to invest in stocks listed on the Saudi Stock Exchange (Tadawul), which can give you some exposure to Saudi Aramco shares.
- Emerging market funds and ETFs. Another option is using funds or ETFs that invest in emerging markets, although you’ll need to check and make sure Saudi Aramco is included in the holdings.
- Investment trusts. There are global investment trusts and those with a focus on emerging markets or energy that may have exposure to Saudi stocks, including Saudi Aramco.
Is Saudi Aramco profitable?
Yes, it’s regularly one of the most profitable global companies. In the most recent quarterly report, it revealed a net income figure of $108.8 billion. And for 2022, the full year’s net income figure was $597.2 billion.
Should I invest in Saudi Aramco?
Considering how limited your options are for investing in Saudi Aramco, you might want to give this one a miss. However, the decision is down to you and some of the alternative ways for indirectly investing could provide you with more diversified exposure to the region.
That being said, you may not want to increase your exposure to Saudi Arabia and similar emerging markets. In an ideal world, it would be useful to have better access to this stock, but the reality is that it’s quite difficult, and there may be more suitable investment opportunities out there.
Is there a Saudi Aramco ETF?
Not specifically just for Saudi Aramco, but there are some ETFs that invest in the Saudi Arabian Stock Exchange (which contains Saudi Aramco), and also emerging markets ETFs that include the stock.
It’s best to comb through the portfolio of any potential ETFs before you invest. And typically, it’s not worthwhile using an ETF just for exposure to a single stock.
Saudi Aramco vs other big energy stocks
Below are the most comparable competitors to Saudi Aramco in terms of 2022 revenue, and it’s much easier to invest in most of these oil and gas stocks:
- Saudi Aramco (2222.SE) $589.5 billion
- PetroChina (0857.HK) $457.4 billion
- Sinopec (0386.HK) $453.6 billion
- ExxonMobil (XOM) $393.2 billion
- Shell (SHEL) $365.9 billion
- Total (TTE) $256.6 billion
- BP (BP) $248.1 billion
- Chevron (CVX) $232.1 billion
Share price for Saudi Aramco: 32.2
Why is Saudi Aramco so profitable?
Finder money expert George Sweeney answers
Even as we attempt to transition to a greener future, oil and gas are still a global necessity. With a limited supply of these commodities, the prices have remained fairly high over the past few years.
Saudi Aramco controls the second-largest crude oil reserves, and has the largest daily production capacity for oil barrels worldwide. The fact that Saudi Aramco is still largely nationalised can work in its favour as the company can be more efficient with fewer checks and balances. There’s only really one major shareholder to appease and this gives the firm a steady sense of direction.
Pros and cons
Pros
- One of the largest and most profitable companies in the world
- More accessible to investors since the 2019 IPO
- Fewer regulation measures for energy than in other countries
Cons
- Difficult to buy shares unless you’re a Saudi national or have a high net worth
- Alternative options like using CFDs is risky
- There have been accusations of human rights violations
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Bottom line
Investing in Saudi Aramco is not much easier than before its IPO. In terms of actually buying Saudi Aramco shares, it’s quite a slippery customer. The best way to invest could be a more diversified approach into the region using some sort of fund or investment trust.
Although buying Saudi Aramco stock may remain slightly out of reach for now, there are plenty of other exciting global opportunities if you want to own a piece of the energy industry.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
