By
Julia Sakovich
January 18th, 2024
Aramco shares fell below its IPO price level for the first time on Sunday. Other Saudi stock markets like Tadawul, Abu Dhabi Index, also fell caused by the OPEC-Russia deal gone sour on Friday.
Shares of the Saudi Arabian Oil Company, Aramco, fell below its initial public offering (IPO) on Sunday. During the IPO listing back in December, the shares were sold at 32 riyals, whereby on Sunday by 12:30 p.m they were trading at 30.90 riyals ($8.24). This reciprocated to a 6.36% fall, a negative effect thought to have been fueled by the OPEC-Russia deal gone soar on Friday.
The decision on Aramco IPO was a dramatic change to the oil industry as the company had been nationalized for over five decades. It was on the main agenda of Prince Mohammed to revolutionize the Saudi economy by 2030 in order to be ready for the post-oil era in the global and local economy.
With the oil company valued over $1 trillion by a number of financial institutions, it makes it a huge market player in the gulf economy. The government of Saudi Arabia owns the highest stake in the company, hence the huge involvement in its operations.
Main Reason for Aramco Shares Plunging
According to the Friday meeting, OPEC and Russia failed to agree on a production cut that was intended to contain a plunge in the oil prices which is being affected by the ongoing coronavirus outbreak.
The market price of crude oil drastically fell as a result, following the steps of most stock markets globally that are bleeding out due to coronavirus outbreak. According to analyst consultant at HIS Market LTD, Roger Diwan, with the dramatic decrease in the oil demand globally, the market price is likely to hit its lowest in 20 years by the next quarter.
During the meeting, the 14 members of OPEC were pushing for a cut in output of around .5 million barrels per day in order to stabilize the oil market price, however, Russia was reluctant on agreeing with the course, leading to the meeting being adjourned.
The Saudi needs the oil prices leveled at $83.60 per barrel in order to keep the government’s projects running smoothly, however, on the centrally Russia only needs around $42.40 per barrel. This led to the conflict of interest in both parties who are huge market players in the oil industry.
Saudi Arabia’s stock market exchange, Tadawul, also received a huge blow as a result of investors back-off from the risky stock market due to the fast-spreading coronavirus outbreak. It dipped around 7.7%. Other stock markets like those from Dubai, Abu Dhabi, and also from Kuwait were not spared during the market dip.
