IN DECEMBER, WHEN Saudi Aramco listed 1.5% of its shares on the Riyadh Stock Exchange, it became the world’s most valuable listed company, with a market capitalization of around $1.9 billion. Bosses at the state-backed oil giant have assured investors that low costs and ample reserves will make it resilient in a downturn. Since then, Saudi Arabia and Russia have waged a short but brutal price war, covid-19 has caused the most sudden collapse in oil demand on record, and Aramco has lost its stock market crown to Apple, whose market value rose nearly 50% this year to $1.9 billion, while Aramco edged down 6%. Then, on August 9,

The events are a Rorschach test for both Aramco’s boosters and its critics. Proponents see a company that can produce more oil, more profitably than anyone on Earth. Skeptics point to unusual vulnerabilities, including its majority owner’s dependence on its profits. As with all Rorschach tests, there is no one correct rating.

Start with the optimists. On August 10, Amin Nasser, chief executive of Aramco, touted its “resilience through oil price cycles.” Aramco this year may have endured more of a cyclone than a cycle, but Mr. Nasser’s assertion rings true. Aramco performed well, at least compared to its rivals. It still made money, $6.8 billion in the three months to June, unlike Royal Dutch Shell and BP, two European giants, which lost $18.1 billion and $16.8 billion respectively. .

Or take Aramco’s debt. At 20.1% stake, it sits above the 5% to 15% range the firm had promised, in part due to its $69 billion purchase of a 70% stake in SABIC, a Saudi state-controlled petrochemical company. However, it remains less indebted than the other oil majors. Critically, its investors enjoy juicier returns (see chart). In a world where many companies are reluctantly choosing to cut their dividends — as BP cut by half and Shell by two-thirds — Aramco is delivering on its promise to return $75 billion to shareholders this year.

Aramco’s 262 billion barrels of crude reserves and low production costs also allow it to limit spending without threatening future production, unlike U.S. fractionators, forced to curtail activity as investors turned on the shale. Large international companies are also reducing capital expenditure. BP and Eni, an Italian major, plan to cut crude output over the next decade amid investor disenchantment with oil returns and growing concern over climate change. If this continues, Aramco could gain market share without needing another price war.

For skeptics, to say that Aramco is tougher than its rivals is like bragging that the milk is sour but not curdled – neither prospect is appetizing. The outlook for oil remains uncertain as consumer habits change, electric cars become cheaper and governments mull over new climate regulations.

A bigger concern in the short term is Saudi Arabia’s influence over Aramco. Minority shareholders of the company, they remain powerless. And the past few months have shown just how complicated royal scrutiny can be.

Aramco’s production does not depend on market forces, but on Saudi priorities. At the height of the price war in April, Aramco was pumping 12.1 million barrels a day – an impressive feat that helped depress global prices and squeeze Aramco’s profits. For every dollar the price of oil drops, Aramco’s cash flow typically decreases by $1.5 billion, estimates Neil Beveridge of Bernstein, a research firm.

As Saudi Arabia made peace with Russia and others in an attempt to balance crude markets in May and June, Aramco resumed its role as central oil banker. It’s better than waging a price war in a pandemic, but it’s still troublesome for Aramco. The kingdom is calibrating its production not only to support oil prices, but to encourage other petrostats to do the same.

Aramco’s interests and those of the kingdom may diverge in other ways. For example, even as the market value of SABIC, also listed in Riyadh, has fallen over the past year, Aramco has not renegotiated the $69 billion purchase price agreed in 2019. The chairman of ‘Aramco, Yasir Al-Rumayyan, also leads the Saudi public. Investment Fund, which sold its 70% stake in SABIC to Aramco and is also responsible for investing to diversify the Saudi economy.

This economy is strained. Last year, Saudi Arabia needed oil prices above $80 a barrel to balance its budget. Brent, the international benchmark, has not reached more than $50 since February. Despite spending cuts, Saudi Arabia still faces a gaping deficit.

All Aramco shareholders aspire to the same thing: payments. To attract investors ahead of listing, Aramco said it would prioritize dividends from non-state shareholders for five years, be it hell, rising waters or cheap oil. No one thought he would have to make that choice. Now the company has borrowed to meet its $75 billion dividend promise. As Beveridge notes, this strategy is not viable at current oil prices. These priority payments remain subject to Board approval. Sooner or later, Aramco will have to decide: keep the promise to investors or renege? It will be a real test of its good faith as a public company.