Information about the privatisation via an IPO of state Saudi oil company Saudi Aramco has appeared in global journalistic publications. Aramco currently controls over 10% of the world’s oil. The main thing which is worrying the market is as to whether the sale of Saudi Aramco shares will change the price set up on oil via a refusal to reduce extraction.
As we see things, this is unlikely since investors will probably not be offered a controlling share package. In general, the sale of oil shares during low prices is a bad idea and an excellent opportunity for investors to make money. Together with the fact that this investment is connected to serious political risks; beginning from the conflict with Iran and ending with internal political instability.
Furthermore, we believe the support the Saudi emirs are receiving from the Americans is massively exaggerated. Moreover, the proposed privatisation via IPO could cause a reassessment of investment portfolios and, correspondingly, a sell off of major oil chips, including that of giants like Gazprom, Lukoil and Rosneft. The plans of the Saudis will also put the partial privatisation of Rosneft - set for this year - under threat.