OPEC, Aramco Control Headlines More Than Oil
Production cuts and a splashy IPO pale before market forces.
Prince Abdulaziz bin Salman, state minister for Saudi Arabia's energy ministry, left, listens as Khalid Al-Falih, Saudi Arabia's energy and industry minister, speaks to reporters ahead of a OPEC meeting in Vienna, Austria, on July 1, 2019.
Photographer: Bloomberg/BloombergWhen it comes to sound and fury signifying not much, the oil world got a twofer on Thursday. While OPEC fumbled setting new production targets in Vienna, the oil company belonging to the biggest member priced its long-awaited IPO in Riyadh.
The pricing of Saudi Arabian Oil Co., or Saudi Aramco, can best be summed up with the headline “World’s Biggest Dog Bites World’s Biggest Man.” Shares sold at 32 riyals ($8.53) apiece, at the top of the range of 30-32. Combine that extraordinarily narrow range with the lack of a global offering, a stake being sold of just 1.5%2 and inducements including bonus shares and guaranteed dividends, however, and anything less than the maximum would have been astounding. As it is, having raised at least $25.6 billion, the Saudi government obtains #biggestIPOeva bragging rights. In terms of maximizing proceeds or setting a credible price on the family silver, not so much.