DUBAI/TOKYO -- Saudi Aramco's market capitalization has topped the $2 trillion mark in October on the back of surging prices for crude oil and natural gas, rapidly approaching top-ranked Apple's $2.3 trillion.
The company now ranks third in the world by market capitalization, also behind Microsoft's roughly $2.2 trillion. This marks the first time that the state-owned oil giant recovered to above the $2 trillion target, set by de facto Saudi leader Crown Prince Mohammad bin Salman, since right after the initial public offering in 2019.
If crude prices remain high, Aramco could come even closer to Apple, especially with the latter trending downward since September.
Formally named Saudi Arabian Oil, the state oil giant reached the $2 trillion market cap soon after going public but had since remained under the benchmark amid a growing global push for decarbonization.
Other key energy stocks are also surging. Russia's state-owned Gazprom had jumped nearly 90% from the start of 2021 to a new year-to-date high of 397.64 rubles ($5.53) at one point Wednesday. Rosneft, another Russian state company, logged a 50%-plus rise over the same period to 663.35 rubles.
BP, Royal Dutch Shell and TotalEnergies, formerly Total, also hit year-to-date highs this week as investors bank on the commodities boom lifting the companies' financial performance and the value of their assets.
The recent rise in energy prices stems largely from years of reduced investment in crude, gas and coal, with many U.S. and European companies scaling back new development of fossil fuels amid a global shift toward clean energy. But global energy supplies have been running tight, with global demand picking up following a coronavirus-induced lull, spurring fuel shortage concerns.
OPEC Plus, a 23-country group made up of the OPEC and nonmember oil exporters, decided Monday to stick to its plan for a gradual increase in production, even with demand expected to start rising for the winter.
Aramco's rally is fueled partly by its state-owned status. Privately owned companies are under pressure from investors to curb their carbon footprints and have a harder time redirecting investments back into fossil fuels even when prices rise. But Aramco and other state-owned oil companies in the Middle East can continue aggressively investing in the field.
Aramco CEO Amin Nasser says the company plans to increase its daily crude output capacity to 13 million barrels by 2027 from the current 12 million. State-owned companies are expected to become bigger players in the global energy market, at least in the short term.
A continued rally would pave the way for Aramco to list overseas, accelerating the crown prince's plans to privatize the company and curb Saudi Arabia's economic dependence on oil. Aramco listed a much smaller portion of its shares in 2019 than originally planned, and only at home. Plans to list overseas, likely in New York or London, remain up in the air.
One of Aramco's key advantages is its significantly lower production costs. The company is believed to be planning to undercut the competition until it is the last one standing.