Saudi Aramco, considered the largest oil producer, has also become the world’s most valuable company, surpassing US technology giant Apple. The change in positions of the two companies is largely attributed to the rising oil prices due to the war in Ukraine and a steady recovery around the world from the coronavirus pandemic. Rising demand and rising costs, in turn, are driving up the shares of oil companies. On the other hand, technology giants are seeing a decline in their fortunes across global markets.
Aramco’s market valuation hit $ 2.43 trillion earlier this week, according to a CNBC report. Apple, meanwhile, fell 5 percent to $ 2.37 trillion. The technology giant’s valuation has eroded over the past month as stocks continued to decline, mainly due to the strict Covid-19 restriction in China that led to supply chain restrictions. Investors believe it will hurt Apple’s June quarterly results.
While technology stocks have fallen sharply in recent months due to fears that people would be less likely to buy high-end devices as inflation rises and central banks withdraw excess liquidity, energy stocks and prices have recovered sharply. Data showed that Apple has fallen nearly 20 percent since early January, while Aramco has jumped more than 27 percent so far this year. In fact, the oil giant reported in March that its full-year profit more than doubled last year due to rising oil prices.
But the future remains uncertain, in part due to rapidly unfolding geopolitical events. Pressure is increasing oil-producing countries to increase production amid sanctions against Russia and cooling prices. But most countries, including Saudi Arabia, have so far resisted the demand to cut prices significantly.
The other factor that could dampen energy demand is rising inflation, which could cool energy prices – and consequently the profits of energy companies.
In 2020, on the technological boom, Apple dethroned Saudi Aramco to become the world’s most valuable publicly traded firm.