Aramco IPO Gives #SaudiArabia Incentive to Pump More Oil - Bloomberg

Aramco IPO Gives Saudi Arabia Incentive to Pump More Oil - Bloomberg:

Now that Saudi Aramco is finally about to become a public company, it will have to start acting like one. And that means the share price of the state-owned oil giant will be of primary consideration to its executives and its shareholders. The kingdom’s monarchy, which will still control nearly all of Aramco’s shares after the IPO, will have particular interest in the stock price as it seeks to sell additional shares following the lock-up period. But because Aramco is a unique oil company, this could lead to unexpected OPEC oil policies.

The widely held perception is that the Saudi monarchy will seek higher oil prices to bolster the share price for a publicly traded Aramco (the company’s formal name is Saudi Arabian Oil Co). The accepted forecast calls for Saudi Arabia’s Oil Ministry to act to limit OPEC production at this week’s meeting or those in the future, to achieve these higher oil prices — and indeed, there are reports that the kingdom is pushing for a three-month extension of current production cuts, through June 2020. However, the best way for Saudi Arabia to boost Aramco’s share price is actually to increase its own oil production, even if that leads to lower prices.