The Saudi oil giant Aramco’s shares dropped to their lowest points in over a year amid rumors that OPEC Plus will take action to keep the price of oil production low. Investors are waiting for a clear explanation regarding this upcoming secondary offering so they can ascertain the reasons behind this and the future of the company’s shares, which aim to offer new shares in the coming days.
Noteworthy is the February Bloomberg report stating that Aramco, the Saudi oil company, is seeking to raise at least $10 billion by selling secondary shares.
According to reports in international newspapers, the Kingdom of Saudi Arabia and its allies will be meeting on June 2, 2024, to discuss the production policy. Based on this, it is expected that the Kingdom of Saudi Arabia will maintain its production levels close to what they have been since three years ago.
The price of Aramco shares has clearly declined, and this is reflected in a wider decline in the Saudi stock index. There are two possible causes for this: the first is the lack of professionalism in the Kingdom’s policies under Mohammed bin Salman’s (MBS) leadership regarding Aramco’s economic dealings; the other is the desire for investors to provide their liquidity for possible new listings.
According to analysts, Aramco has announced a new trading strategy for its shares after losing 12% of their market value this year. The share offering price in 2019 was 32 riyals; the trading price of the share will be 29.05 riyals.
After Aramco’s largest-ever IPO in 2019, the government raised $29 billion, making it the most valuable company in the stock market at the time. However, four years later, according to MBS’s policies, Aramco was ranked sixth.
According to sources familiar with the matter, Saudi Arabia is officially getting ready to sell a further portion of the oil company’s shares in a secondary offering on Sunday of next week, with the goal of raising over $10 billion.
According to the sources, the MBS administration intends to carry out a book-building procedure in order to restrict investor interest in the offering until Thursday.
Furthermore, according to the sources, Aramco refrained from commenting and promptly addressed requests for information. The terms of the deal, including its size, could still change. No final decisions have been made regarding the offering period.
The proposal, according to the Saudi government, aims to assist in diversifying the Saudi economy, which is currently dependent solely on oil as the nation’s primary source of income and is driven primarily by religious tourism, specifically the Hajj and Umrah. Analysts, however, think that after eight years, reality confirms that MBS’s policies might soon eliminate this only source as well.
