Finimize - 🛢 Aramco’s getting cozy with China

Hi Reader, here's what you need to know for March 28th in 3:10 minutes.

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Today's big stories

Saudi Aramco has made big waves in China’s oil sector
Here are the five savvy “sell” rules the pros swear by – Read Now
Shaky markets have given firms cold feet about going public

Aramco Adds Oil

What’s Going On Here?

Saudi Aramco, the oil behemoth, is carving more inroads into the world's second-biggest economy.

What Does This Mean?

Aramco has a $161 billion profit from last year burning a hole in its pocket, and it looks like the firm has got its heart set on a Chinese spending spree. The oil titan inked a deal over the weekend that’ll see it co-invest in a new $12 billion refining and petrochemical plant in Liaoning province. And the very next day, Aramco upped its multi-billion dollar investment in the country – coughing up $3.6 billion for a 10% stake in one of China's biggest oil-refining firms. That kind of spending might look overeager, but these are pretty savvy moves: they let Aramco wade further into China's refining sector while bolstering its crude oil sales to the country. As a matter of fact, these two recent deals will see the firm shipping nearly 700,000 barrels of oil each day to some of the very refineries it’s investing in.

Why Should I Care?

Zooming in: Fuel to the fire.
Aramco's ambitions are a clear sign that the firm’s got faith in China’s energy demand growing over the coming years. But the oil titan’s moves are a kind of counter-attack too. See, Western sanctions have pushed Russia to offer its slippery elixir elsewhere at discount prices – and just last month Russia nabbed first place as China's top supplier. That’s put Saudi Arabia – normally China’s go-to oil producer – on red alert, suggesting that this rivalry might be about to start heating up.

The bigger picture: Get the smelling salts.
China’s bounceback has been somewhat muted so far, with data showing that industrial groups’ profits slumped by 23% in the first two months of the year. The world’s second-biggest shipping group, Maersk, reckons that weakness is down to the fact consumers are still “stunned” by pandemic disruptions. When they recover, then the economy should come back roaring too.

You might also like: Investing in the oil and gas industry in good times and bad.

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Analyst Take

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