Saudi Aramco shares fell as much as 10% on Monday, extending a drop below the company’s initial public offering (IPO) price.
The latest dive in the state-owned company’s share price came after Saudi Arabia cut its official selling prices for crude oil as global oil markets plunged in response to news of a big output increase.
Aramco’s share price fell below its IPO listing price on Sunday for the first time since trading began last December when the company’s listing was seen as a culmination of years of Crown Prince Mohammed bin Salman’s efforts to diversify the economy.
Since then sentiment towards oil and oil shares has been damaged by the impact of the coronavirus on demand and Russia’s refusal to support deeper output cuts, prompting the Organization of the Petroleum Exporting Countries (OPEC) to remove all limits on its own production.
Shares in Aramco were at 27 riyals ($7.20 U.S.) in early trading Monday, 15.6% below its IPO price of 32 riyals, which in December valued the company at $1.7 trillion in the world’s biggest ever share offering. By mid-session Monday, prices had stabilized slightly and were 6.8% lower versus the day’s early lows that marked a 10% fall from Sunday’s close.
Benchmark Brent crude, meanwhile, fell by up to a third on Monday after Saudi Arabia, the world’s lowest cost producer, said it would increase output to gain market share.
Aramco, which is set to announce its 2019 earnings on March 16, is expected to post a net profit of 347.6 billion riyals ($92.6 billion) in 2019, according to a mean estimate of 15 analysts polled by Refinitiv, down from $111 billion in 2018.
