Saudi Aramco shares hit record as oil demand rebounds

Saudi Aramco’s shares rose to a record as its chief executive officer said oil demand continues to rebound from the coronavirus pandemic, including in the company’s main market of Asia.

“With the global recovery we’re seeing today, there is more demand for products and we see that from different enclaves, especially in Asia,” Amin Nasser said during a speech in Riyadh, Saudi Arabia’s capital. “There’s some pick up in the rest of the world.”

Crude prices have surged around 20 per cent this year to more than $90 a barrel with consumption increasing and many major producers struggling to boost supply. Several traders believe prices will soon hit $100.

Aramco’s shares rose as much as 6 per cent on Monday, before paring gains to SAR39.75 as of 11am in Riyadh. The world’s biggest energy company is up 11 per cent this year.

Crude’s surge is contributing to an acceleration in inflation globally and putting pressure on central banks to increase interest rates. US President Joe Biden, keen to ease cost-of-living pressures for Americans before mid-term elections in November, has in recent months called on producers to raise output faster.

Nasser said part of the problem is a lack of investment in the oil sector. Many energy companies are cutting back on new developments as governments and investors push them to lower their carbon emissions. Saudi Arabia and others in the Gulf such as the UAE are among the few producers still spending billions of dollars to increase their capacity.

“There’s not adequate investment” to “sustain growth in demand in the mid to short term,” Nasser said.