No policy change seen at June 5 OPEC meeting: Delegates

Updated 05 May 2015

No policy change seen at June 5 OPEC meeting: Delegates

LONDON: OPEC countries are set to maintain current production levels at a meeting next month, three delegates said, as Gulf states continue to focus on market share and a rally in crude prices mutes calls from other members for supply cuts.
While the June 5 meeting in Vienna is likely to hear demands from some members of the Organization of the Petroleum Exporting Countries for a reduction in the amount of oil pumped, even officials from countries which favor a curb see it as unlikely.
A surprise rally driven by tensions in the Middle East and signs the supply glut will ease pushed Brent crude to a 2015 high of $68.23 a barrel on Tuesday, up from January’s nearly six-year low close to $45. Oil prices more than halved last year after reaching $115 a barrel in June.
“The prices were expected to be below $40 for Brent,” said a delegate from a Gulf OPEC country.
“The prices have been better than everyone expected, so OPEC policy will continue most likely.”
Last year’s collapse in oil prices accelerated after OPEC refused to cut its output limit of 30 million barrels per day in favor of defending market share. That shift in policy was driven by top exporter Saudi Arabia, which has raised output to a record high, and supported by Gulf states.
Oil’s plunge sent shockwaves through financial markets already fretting about consumer price deflation in highly indebted Europe and elsewhere, and prompted inflation-targeting central banks to slash interest rates to zero and even below.
The deflation scare has receded as prices have bounced back, with cheap oil helping spur consumer demand and economic growth.
After a near 50 percent jump since January, crude prices are being watched closely by bond markets and policymakers. Yields jumped last week as four months of deflation in the euro zone ended, while the Federal Reserve is expected to raise US interest rates for the time since 2006 later this year.
Riyadh announced leadership changes at Saudi state oil company Aramco last week and there is speculation Petroleum and Mineral Resources Minister Ali Al-Naimi may retire after two decades in post, but there has been no sign so far it is considering a change in OPEC policy.
At OPEC’s last meeting in November, a majority of members favored output curbs to support prices. But the four Gulf members, who together account for more than half the group’s output, refused to cut without the participation of non-OPEC producers.
Delegates who support keeping current policy see signs that lower oil prices are stimulating global demand and putting a brake on more expensive sources of supply, such as US shale production. Any action that pushes prices back up could kill off these nascent trends.
“The market is coming back from the demand side, it’s gradual but it is coming back,” said an OPEC source.
“For the next OPEC meeting, 99 percent it will be a rollover. The market expects this.”

CALLS FOR CUTS

Non-Gulf countries are nevertheless likely to repeat calls for cuts in output, among them Venezuela, suffering from a slowing economy and soaring inflation, and producers such as Algeria whose finances have been hit by falling oil revenues.
Iran wants other OPEC members to make way for a rise in its exports if it succeeds in reaching a final deal with six world powers over its nuclear program. A deadline for agreement on the nuclear issue falls on June 30.
“Iraq is increasing each month and if that is so, and if Iran is back, then either the price has to go down or there has to be some sort of arrangement,” said a source familiar with Iran’s oil policy.
“These are all items to be discussed.”
But the OPEC source said that even though a nuclear deal would weaken prices, it would take some time for Iran to raise production.
Analysts saw the framework accord announced in April as offering little chance of a significant increase in exports until 2016.
Non-Gulf members argue that it is better to sell less oil at a higher price.
A delegate from an African OPEC country which wants a supply cut does not expect one in June, however, unless Saudi Arabia changes its stance or Russia and other non-OPEC members signal their willingness to join output cuts.
“I believe that countries as mine will not have much influence in front of Saudi Arabia and Gulf states in decreasing the production,” the delegate said.
“OPEC is presently dominated by the Gulf producers.”


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: