Saudi Aramco

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Despite being publicly traded, Aramco remains almost entirely government owned.

© FAYEZ NURELDINE —AFP/Getty Images

Saudi Arabian Oil Company, or Saudi Aramco, is a state-owned energy giant based in Dhahran, Saudi Arabia. It is the world’s largest oil producer and, as of 2024, the most profitable company in any industry and among the most valuable. The company was founded in 1933 after Saudi Arabia granted oil exploration rights to what is now Chevron (CVX). The kingdom took full ownership of the company in 1980. Aramco plays a central role in global oil markets and in funding Saudi Arabia’s effort to diversify its economy.

In 1933, Saudi Arabia granted oil exploration rights to Standard Oil Company of California, or SoCal, as the United States sought more oil for national security and its growing automobile industry. SoCal formed a subsidiary, the California Arabian Standard Oil Company (CASOC), to handle the work. It brought in Texaco as a partner in 1936, but the team didn’t find commercially viable oil until 1938.

The perseverance of the company’s chief geologist paid off that year when CASOC struck oil at its Dammam No. 7 site (named after a nearby village) after a series of drilling setbacks. The discovery marked a turning point for Saudi Arabia, laying the foundation for its transformation from a largely agrarian society to a petrostate with considerable influence in Middle Eastern and global affairs. 

As CASOC expanded, additional U.S. companies joined. In 1948, Standard Oil of New Jersey and Socony-Vacuum Oil—both of which would later become part of ExxonMobil (XOM)—acquired stakes alongside SoCal and Texaco. Also in 1948, the company discovered the Ghawar field, the world’s largest conventional oil field. Three years later, it added Safaniya, the world’s largest offshore oil field.

In the 1970s, the Saudi government began acquiring ownership of the company, starting with a 25% stake in 1973. The kingdom’s share rose to 60% in 1974 and reached 100% in 1980. To reflect its state-owned status, the company was renamed Saudi Arabian Oil Company, or Saudi Aramco, in 1988.

For decades, Aramco operated as a powerful but private company, controlling most of Saudi Arabia’s oil infrastructure and producing a significant share of the world’s supply. In 2019, it made headlines by going public. The initial public offering (IPO) raised more than $25 billion, then the largest in history, valuing the company at $1.7 trillion. Although that figure fell short of the $2 trillion target set by Mohammed bin Salman, then deputy crown prince, the listing marked a new era for Aramco as it sought to attract foreign capital and support the country’s economic transformation plans.

Aramco operates as a publicly traded company under Saudi law despite remaining majority-owned by the government. As of 2025, the Saudi government holds more than 81% of Aramco, with another 16% held by the Public Investment Fund, the kingdom’s sovereign wealth fund. Only about 2.4% is available for public trading on the Saudi Exchange, or Tadawul.

Aramco’s low production costs and vast reserves have helped it consistently rank among the world’s most profitable companies. It holds more than 250 billion barrels of proven reserves, the largest total of any company in the world. From 2016 to 2024, it generated about $800 billion in net income, outperforming every other corporation globally over that period. In 2022, it posted a record net income of $161.1 billion, the highest annual profit ever disclosed by a publicly traded company. Earnings fell to $121.3 billion in 2023 and $106.2 billion in 2024, largely due to lower crude prices and reduced refining margins.

Although Aramco shares are listed on the Saudi Exchange (Tadawul), foreign investors face some hurdles to buying them directly. Most must open an account with a licensed local broker or use a swap agreement through a firm approved by Saudi regulators. Another option is to invest indirectly through exchange-traded funds (ETFs). Franklin FTSE Saudi Arabia ETF (FLSA), iShares MSCI Saudi Arabia ETF (KSA), and SPDR MSCI ACWI ex-US ETF (CWI) are among the funds that hold Aramco shares.

Some investors evaluate stocks using environmental, social, and governance (ESG) criteria, especially when considering companies in carbon-intensive industries like oil and gas. Although only a small fraction of Aramco’s shares are available to the general public, the company’s size and influence have drawn attention from ESG-focused analysts and institutions.

The company has taken steps to reduce emissions from its facilities, including efforts to limit methane flaring, but it doesn’t include scope 3 emissions—greenhouse gases released when businesses and consumers burn oil and gas—in its climate disclosures or reduction targets. These downstream emissions make up the bulk of the industry’s climate impact, and leaving them out of climate disclosures has drawn criticism.

Investors’ social and governance concerns about Aramco largely stem from its close ties to the Saudi government. The kingdom has enacted some reforms, such as lifting the ban on women driving in 2018. But it continues to face criticism from human rights organizations. Amnesty International and other advocacy groups have cited abuses such as unfair trials, torture, restricted freedom of expression, and discrimination against women and LGBTQ+ individuals. Because Aramco generates a significant portion of the government’s revenue, some investors consider it indirectly complicit in these issues.

Aramco plays a key role in Saudi Arabia’s broader economic strategy. The country is a leading member of the Organization of the Petroleum Exporting Countries (OPEC) and its extended alliance, OPEC+, which coordinates oil production targets with nonmember countries like Russia. Saudi Arabia has long used these targets to influence global oil prices. But oil is a volatile commodity, and the rise of U.S. shale oil production beginning in the early 2010s has limited OPEC’s ability to manage supply on its own.

At the same time, countries worldwide have worked to reduce greenhouse gas emissions, and long-term oil demand is forecast to decline. Saudi Arabia has pledged to reduce its net greenhouse gas emissions to zero by 2060. Aramco’s profits help fund the Public Investment Fund, which is funding industries such as tourism, mining, and artificial intelligence (AI) to help reduce the country’s reliance on oil.

Aramco itself is also shifting its focus. The company has expanded its focus on natural gas, which is often viewed as a bridge fuel in the global energy transition. In particular, it has been developing liquefied natural gas (LNG), a supercooled form of gas that can be shipped globally. It has also increased its refining and petrochemical business.

Specific companies and funds are mentioned in this article for educational purposes only and not as an endorsement.