#Saudi Aramco Share Price Set to Face Renewed Test as Oil Slumps - Bloomberg

Saudi Aramco Share Price Set to Face Renewed Test as Oil Slumps - Bloomberg:

Saudi Aramco’s stock risks dropping below the initial public offering price on Sunday when trading resumes in Riyadh after OPEC+ talks ended in failure and oil prices collapsed.

Shares in the world’s biggest oil producer have largely defied gravity since they were listed in December, not falling below the initial public offering price of 32 riyals ($8.53) even as the coronavirus led to a 30% slump in crude prices since the start of the year. Aramco’s stock has only slipped about 6% in 2020 to close at 33 riyals on Thursday, the last trading day of the week.

With oil falling the most in more than a decade on Friday, Aramco is set to face further selling pressure when trading resumes that could push it below the IPO price. That would be a major blow to the kingdom’s citizens, who were encouraged to invest in the company after global investors largely took the view it was overvalued and so stayed away. It could also hamper plans for further stake sales in the company.

Oil’s fall also illustrates how closely intertwined Aramco’s profitability is with politics in Riyadh. Prices slumped after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the oil producer group to a breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. Russia, which has taken steps to shore up its economy, wanted to use lower prices to help wipe out competition from U.S. shale.