Brent oil inches up on Iran tensions and OPEC, while US crude falls

A trade war between the United States and China has dampened prospects of global economic growth and oil demand. (AFP/File Photo)
Updated 05 July 2019

Brent oil inches up on Iran tensions and OPEC, while US crude falls

  • Both benchmarks were set for their biggest weekly falls in five weeks
  • In the US, new orders for factory goods fell for a second straight month in May

LONDON: Brent oil ticked higher on Friday, supported by tensions over Iran and the decision by OPEC and its allies to extend a supply cut deal until next year, while US benchmark crude prices fell on weak economic indicators.
Brent was up 53 cents at $63.83 per barrel by 1330 GMT. US West Texas Intermediate (WTI) slipped 18 cents to $57.16. The US market was closed on Thursday for a holiday.
Both benchmarks were set for their biggest weekly falls in five weeks.
A trade war between the United States and China has dampened prospects of global economic growth and oil demand, but talks between the two nations resume next week in a bid to resolve the deadlock.
“The truce between the United States and China is not translating into anything in the real economy in the short term,” Petromatrix oil analyst Olivier Jakob said.
“The negotiations still have to happen and until then we will be looking at very weak manufacturing PMIs,” he said referring to Purchasing Managers’ Indices which indicate companies’ optimism about their sector.
German industrial orders fell far more than expected in May, and the Economy Ministry said this sector of Europe’s largest economy was likely to remain weak in the coming months.
In the US, new orders for factory goods fell for a second straight month in May, government data showed, stoking the economic concerns.
The US Energy Information Administration reported on Wednesday a weekly decline of 1.1 million barrels in crude stocks, smaller than the 5 million barrel draw reported by the American Petroleum Institute and less than analyst expectations.
The Organization of the Petroleum Exporting Countries and other producers such as Russia, a grouping known as OPEC+, supported prices by extending their deal on supply cuts.
Tension in the Middle East also offered some support. Iran, already embroiled in a row with the United States, threatened on Friday to capture a British ship after British forces seized an Iranian tanker in Gibraltar over accusations the ship was violating EU sanctions on Syria.
“It is just another sign that the market sentiment is not strong enough to react to those headlines and events, which is quite unusual,” Jakob said.
A Reuters survey found OPEC oil output sank to a new five-year low in June, as a rise in Saudi supply did not offset losses in Iran and Venezuela due to US sanctions and other outages elsewhere in the group.
Oil production by Saudi Arabia, the world’s top crude exporter, was 9.782 million barrels per day (bpd) in June, an OPEC source said, slightly up from 9.67 million bpd in May.


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: