Aramco IPO Could End OPEC Status Quo

www.zerohedge.com | 9/29/2017 | Staff
dorkyrocker (Posted by) Level 3
Sources have told Reuters that the Saudi drive to get OPEC on board with production cuts last year - threatening to quit the bloc if members disagreed - was in part meant to maximize Aramco’s valuation with higher oil prices ahead of its planned IPO.

An Aramco IPO changes everything for OPEC.

Kingdom - OPEC - Country - Oil - Firm

The Kingdom would be the only OPEC country with a national oil firm listed abroad, and listing abroad means listening to private investor sentiment. It also means adhering to listing rules, including anti-trust legislation, particularly in the United States, which frowns on “price fixing”—a practice Aramco could be accused of under the current production quota scenario.

“Once a stake in Aramco is floated, however, the company will have to take into account the interests of outside investors,” Reuters wrote, citing industry sources.

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It’s no longer about market share for Saudi Arabia, which is why the Kingdom has become much less focused on keeping the pumps on high.

Newspaper - OPEC - Source - Surprise - Kingdom

The newspaper quoted a high-level OPEC source as expressing surprise at how quickly the Kingdom became “the main price hawk” and “shifted from its policy of prioritizing market share, by pumping oil at full tilt, to supporting production cuts following its decision to list Aramco.”

Now it’s about making Aramco more attractive, and that’s a major challenge. The most obvious way to make Aramco more attractive is to see the price of oil jump, but—as the modest results...
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