Oil is worth more than technology… again. Saudi Aramco is the most valuable company in the world. This oil company, based in Saudi Arabia, reached a market value of more than 2.4 billion dollars, after rising almost 30% so far in 2022. It displaces Apple, which became the first company in history with value greater than 3 billion dollars and this week it is below 2.3 billion.

This castling on the summit is rare news, in a rare year. The oil companies rise because the price of energy was uncovered with the Russian invasion of Ukraine. They recover a place they occupied until three years ago. In 2019, the American Exxon was the most valuable company in the world. It was displaced by Apple. When that happened, almost everyone assumed that this displacement was irreversible: the future belonged to the technology companies and the oil companies had to prepare to occupy more modest places in the standings.

Tech stocks fell as stock market investors are reducing their bets on a sector that is associated with high growth but also risk. Netflix is ​​down 71%; Amazon 35% and Tesla 31 percent. Number 1, Apple loses 20% in the year, despite having delivered a quarterly report with good numbers that reflect growth. The market turns its back on him because it does not like what it sees for the coming months: supply problems for key parts continue, including semiconductors, and prospects in the Chinese market are deteriorating. It is the brake, related to the draconian measures to contain the covid; the growing competition from Chinese companies that do things well and also exploit the growing nationalism, amid tensions between the United States and China.

An oil company was not in the script to be the most valuable company in the world in 2022, so analysts are quick to say that this crooked line will be corrected sooner rather than later. Correction means that the oil companies will see their value drop, because the war in Ukraine will end at some point and the oil market will recover its balance at a point with lower prices. The B side of this correction, according to the experts, would include the techs leaving the territory of the great Bears and entering the zone of the Bulls. They will go from the big drops to the vigorous recovery.

The problem with this forecast is the same as we have with all forecasts right now: The crystal ball is broken. Oil may rise even higher, if China reopens its economic activity before the invasion of Ukraine ends. In this scenario, we can consider that the United States is not able to replace the production that Russia placed on the market, nor is it successful in the negotiations with Venezuela and Iran.

When will the technological ones return to be worth what they were worth in 2021? Investors are being ruthless with tech stars. They treat them as if they were all the same, without giving due importance to the history of each one, the market it serves and its plans to face stagflation or its competitors. It may be unfair, but that’s how markets work: they have some bipolarity. A year ago we found ourselves in the opposite situation: technology companies rose by inertia. The economy did not matter, nor its balance sheet… nor the mental health of its CEOs.

The future is no longer what it was, is it? The energy transition is experiencing a moment of confusion due to the inflationary peak that caused the disruption of the Russian supply, especially in Europe. Greenflation is what this process is called and it is one of the fancy words to learn in 2022. The energy transition suffers, but it remains a priority on the agenda of the largest countries in the world and the main energy companies. Remember that BP now no longer means British Petroleum, but Beyond Petroleum (beyond oil).

Will Apple take the throne again? Most likely, yes, because she sells a very powerful story: it is a chic passport to the future that has to be renewed every year. He will return and his destiny will be to lose number 1, but not at the hands of an oil company. The future belongs to technology and the next Number Ones will come from that world. In the form of technological solutions, they will sell us health, energy, pleasure, status or a virtual universe. The rise of Saudi Aramco is an anomaly…one that will not be corrected in the blink of an eye. It is here to remind us that the world is not ready to let go of its addiction to oil.

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Luis Miguel Gonzalez

General Editorial Director of El Economista

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Degree in Economics from the University of Guadalajara. He studied the Master of Journalism in El País, at the Autonomous University of Madrid in 1994, and a specialization in economic journalism at Columbia University in New York. He has been a reporter, business editor and editorial director of the Guadalajara newspaper PÚBLICO, and has worked for the newspapers Siglo 21 and Milenio.

He has specialized in economic journalism and investigative journalism, and has carried out professional stays at Cinco Días in Madrid and San Antonio Express News, in San Antonio, Texas.



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