Saudi Aramco’s share price has recovered after yesterday hitting an all-time low since its 11 December 2019 market debut. On Thursday share prices rose to SAR35 ($9.33) after having fallen to SAR34 – 12% less since their peak of SAR38 ($10.32) on 16 December 16.
Analysts said that Thursday’s positive trend is in part due to the de-escalation of hostilities between Iran and the US after strikes were implemented on both sides. On 3 January, US drones carried out a targeted killing of General Qasem Soleimani, Tehran’s second most senior official and captain of the Quds forces. On Wednesday, Iran retaliated by attacking US forces at Iraqi bases in Al Asad and Irbil.
Both sides appear to be ready to cease hostilities, with the US sending a letter to the UN Security Council stating its readiness to start negotiations “with the goal of preventing further endangerment of international peace and security or escalation by the Iranian regime”.
GlobalData upstream oil and gas analyst Somayeh Davodi said: “Saudi Arabia, being one of the US’s main allies in the region, could have been threatened by the risks from Iran. However, it seems that the tension between the two countries has de-escalated at the present, resulting in Aramco’s share price getting closer to what it was before the hostilities.”
According to MEED editorial director Richard Thompson, Saudi Aramco’s fall back was also a natural adjustment to a series of circumstances.
“Immediately following the IPO, their price was lifted by a combination of local enthusiasm for Aramco, government promotion of the IPO, and by the extension of the Opec plus production cuts in early December,” Thompson said.
“With the structural picture suggesting that an underlying oversupply will continue to suppress oil prices, it was always likely that we would see the share price fall back from their initial surge.”
Offshore Technology has approached Saudi Aramco for comment.