Earlier this year, after announcing record revenues of $25 billion for 2004, ExxonMobil became the world's largest company...

The record revenues come on the heels of a "perfect storm" in the oil markets... tight supply, high demand, fear and financial speculation have all come together to drive oil prices higher.

Wait, I've got to clarify something... Yes, Exxon had record profits and hit $400 billion in stock market value, making it larger than Microsoft, Wal-Mart, GE, or any other company in the world.

However Saudi Arabia's Aramco has over 20 times the reserves of ExxonMobil, any way you size it up. So ExxonMobil can't possibly be the world's largest company. With over 260 billion barrels in reserves in the ground, and at an oil price of $60, Aramco has over $15 trillion worth of oil in the ground today. Comparing apples to apples (oil, without natural gas factored in), ExxonMobil doesn't even have a trillion dollars worth of oil.

Who's Got the Oil?

Saudi Arabia's national oil company, Aramco (which is 100% government-owned, of course), has the world's largest pile of oil reserves, by far. But who's next? And where does the U.S. stand? What about China? And how about Canada's oil sands... where do they fit in?

I was curious. So I asked geologist and friend Matt Badiali to give me the details. Take a look:

Countries with largest oil reserves (in billions of barrels), year-end 2004:

1. Saudi Arabia 263
2. Canada* 17*
3. Iran 132
4. Iraq 115
5. Kuwait 99
6. UAE 98
7. Venezuela 77
8. Russia 72
9. Libya 39
10. Nigeria 35
11. US 29
12. China 17

Source: EIA, BP Statistical Review
*Canada's oil sands not counted in this total

The picture is fairly clear... Two-thirds of the world's oil reserves are in the Persian Gulf, where foreign firms aren't particularly welcome. Making matters worse, we've seen a rise of what's called "resource nationalism," which is choking off access to new reserves. With the exception of Canada and the potential offered by its oil sands, there's not a developed country in the Top 10.

The Biggest Oil Stocks

ExxonMobil is the world's biggest oil stock. I find it interesting that Russia's Lukoil has almost as much in reserves (specifically, MBOE, millions of barrels of oil-equivalent units) as Exxon, yet it trades at just 1/10th the value.

Below is a table of the world's largest publicly traded oil companies. I mentally separate them into developed country stocks and emerging market stocks, and then mentally give a "discount" to the emerging market stocks.

Company Reserves* Stock Market Value (in US$bn)
Exxon Mobil 21.2 377.0
BP 14.6 249.8
Total 11.1 152.6
PetroChina 11 161.8
Royal Dutch 14.4 133.5
Chevron 8.5 129.9
Lukoil 20.0 35.6

*Source: Hoovers. Reserves data in MBOE (millions of barrels of oil equivalent units, so it includes all hydrocarbon reserves)

When you think about them like this, PetroChina looks expensive, trading at the same market value-to-reserves as the developed country stocks. And Royal Dutch Shell looks like the least expensive developed-country major (where you get the most reserves per dollar invested). This is nothing scientific, of course, we're just sizing up the world.

So who controls the oil? Exxon is the giant among publicly traded oil companies. But Exxon pales in comparison to Saudi Arabia, and its state-owned oil company, Aramco.

Geologist Matt Badiali believes that oil prices won't be able to fall significantly until large investments are made in infrastructure worldwide. So the price of oil can stay high.

Exxon, BP, and Royal Dutch will of course be beneficiaries. But the biggest beneficiary will likely be Saudi Arabia.

So when someone asks, who controls the oil? The answer is no surprise... it's not Exxon... it's Saudi Arabia.