Saudi Aramco Drops Below IPO Price as Saudi Arabia Kicks off Oil Price Wars.
Markets across the Middle East tumbled Sunday after Saudi Arabia ignited an all-out oil price war by slashing pricing for its crude, making the deepest cuts in at least 20 years on its main grades.
The declines for Saudi Aramco are a setback for a government that had celebrated last year’s record $29 billion initial public offering as a centerpiece of Crown Prince Mohammad bin Salman’s drive to open up the energy-dependent economy.
Saudi Aramco shares dropped below their IPO level for the first time as a looming price war in global crude markets battered the outlook for the kingdom’s flagship oil company. The stock fell as much as 9.2% in Riyadh to trade at 29.95 riyals, compared with the 32 riyals at which they launched on Dec. 11. It trimmed losses to 8.6% as of 1:20 p.m. local time, while the benchmark Tadawul All Share Index lost 8.1%. Trading with Aramco will be suspended if it falls 10%.
Prices plunged because the OPEC confab ended up being an epic fail on the part of all involved. Russia has clearly decided to employ a scorched earth approach to the oil market: every country for itself
The world’s biggest oil exporter began a price war on Saturday by slashing the prices it sells crude into foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the US to entice refiners to purchase Saudi crude at the expense of other suppliers.
Brent futures had their its biggest daily percentage fall on Friday since December 2008, down $4.72, or 9.4 percent, to settle at $45.27 a barrel. It was Brent’s lowest closing price since June 2017.
With demand being ravaged by the coronavirus outbreak, opening the taps may throw oil market into chaos.
Saudi production is likely to rise above 10 million barrels a day in April, from about 9.7 million a day this month, according to people familiar with Saudi thinking, Bloomberg reported.
The state producer lowered April pricing for crude sales to Asia by $4 to $6 a barrel and to the U.S. by $7 a barrel, it said in a pricing announcement emailed Saturday just before midnight Saudi time. Aramco didn’t immediately comment on the strategy behind such deep reductions in pricing.