REUTERS/Ahmed Jadallah
- Shares of the state-led Saudi Aramco gained as much as 3.09% on Tuesday, rising with the price of crude oil.
- Aramco is trading at levels not seen since March 5, when a price war erupted between Saudi Arabia and Russia.
- It’s the first major oil producer to have its stock price recover from the price war.
- Since, major producers have agreed to slash output, and oil demand is showing signs of recovering as economies around the world reopen from lockdowns to contain COVID-19.
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Saudi Aramco, the most valuable company in the world, also just became the first major oil producer to see its share price rebound to trade at levels last seen before the price war.
Shares of the state-led Aramco gained as much as 3.09% on Tuesday. That brought its share price back to its March 5 level, the date of the OPEC+ meeting that preceded the start of the oil price war between Saudi Arabia and Russia.
Aramco shares have been lifted by the price of crude oil and the company’s commitment to its dividend. On May 12, the company said it would still pay its dividend despite a slump in first quarter profits.
Major producers’ stock prices have been roiled by the coronavirus-induced market whiplash and the depressed price of oil. As the coronavirus pandemic cratered global demand for the commodity, a price war broke out when Saudi Arabia and Russia in March failed to agree to further production cuts.
Shares of BP are down nearly 28% from March 5 through Monday’s close, while Royal Dutch Shell has shed nearly 26%. Exxon Mobil’s stock has slumped 9.5% in the same period, and Chevron has fallen nearly 5%.
The price war threatened to push output to record levels while demand remained weighed down by the coronavirus crisis. In April, oil prices plunged into negative territory for the first time ever as worries about storing a supply glut arose.
Since, oil markets have rebounded slowly but surely as OPEC and its allies agreed to production cuts. In addition, as countries around the world slowly reopen their economies from lockdowns, there are signs that demand for oil will return. In China, oil demand is nearing pre-coronavirus levels, according to a Bloomberg report.
Despite the recent gains, Saudi Aramco is still down roughly 5.4% year-to-date.
