RIYADH: 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.
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 outcome of that oil suppliers’ meeting was “an astonishing reversal of what appeared to be a pending production cut” to compensate for lower demand caused by the coronavirus outbreak, said Edward Bell, senior director for market economics at Emirates NBD PJSC in Dubai.
Shares of Aramco, the world’s biggest oil exporter, had largely defied gravity since they were listed, not falling below the IPO price even as the coronavirus led to a slump in crude. The stock had slipped only about 6% in 2020. In the end, the shares were sold mostly to local investors, who were encouraged to buy after foreigners balked at the offering price.
Aramco’s slump could deter the government from selling more shares either domestically or on a foreign exchange, a possibility that Chairman Yasir Al Rumayyan laid out in an interview last month.