Aramco Slumps Below IPO Price as Kingdom Starts Oil-Price War
Saudi Aramco dropped below the IPO level for the first time after oil collapsed and the start of a price war that has the energy giant at its center.
Thestock fell as much as 3.9% in Riyadh on Sunday to trade at 31.7 riyals, below the 32 riyals they sold for in December’s record $29 billion IPO. The benchmark Tadawul All Share Index lost 6.5%.
Shares in the world’s biggest crude producer had largely defied gravity since they were listed, not falling below the IPO price even as the coronavirus led to a slump in oil prices. The stock had only slipped about 6% in 2020.
Oil on Friday plunged the most since 2008 on signs of a breakdown in the global producer alliance that helped engineer crude’s recovery from the worst crash in a generation. Saudi Arabia on Saturday started an all-out price war, with Aramco slashing pricing for its crude and making the deepest cuts in at least 20 years on its main grades.
Saudis Plan Big Oil Output Hike, Beginning All-Out Price War
Aramco’s recent performance contrasts with an initial rally that saw the stock surge about 20% within the first two days, boosting the oil giant’s valuation to the $2 trillionsought by Crown Prince Mohammed Bin Salman.
The shares were sold mostly to local investors, who were encouraged to buy after foreigners balked at the offering price.
Out of 18 analysts tracked by Bloomberg, two have a buy recommendation for Aramco, while there are 12 hold and four sell ratings.
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