OPEC and allies set to extend oil supply cuts, prop up prices

The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding. (File/AFP)
Updated 02 July 2019

OPEC and allies set to extend oil supply cuts, prop up prices

  • Saudi Energy Minister Khalid Al-Falih said on Monday he was growing more positive about the global economy
  • Oil prices could stall as a slowing global economy squeezes demand and US oil floods the market, analysts said

VIENNA: OPEC and its allies led by Russia are set to extend oil output cuts until March 2020 on Tuesday to try to prop up the price of crude as the global economy weakens and US production soars.
The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the US, which has overtaken Russia and Saudi Arabia to become the world’s top producer.
Benchmark Brent crude has climbed more than 25% so far this year after Washington tightened sanctions on OPEC members Venezuela and Iran, causing their oil exports to drop.
But fears about weaker global demand as a result of a US-China trade spat have added to the challenges faced by the 14-nation Organization of the Petroleum Exporting Countries.
Brent was trading flat on Tuesday at around $65 per barrel after OPEC approved the supply-cut extension the previous day.
Monday’s OPEC meeting will be followed by talks with its allies on Tuesday. The gathering is due to start after 0800 GMT.
Russian President Vladimir Putin said on Saturday he had agreed with Saudi Arabia to extend the existing OPEC+ pact and continue to cut combined production by 1.2 million barrels per day, or 1.2% of world demand.
Oil prices could stall as a slowing global economy squeezes demand and US oil floods the market, a Reuters poll of analysts found.
Saudi Energy Minister Khalid Al-Falih said on Monday he was growing more positive about the global economy after a G20 meeting of world leaders over the weekend.
“The global economy in the second half of the year looks a lot better today than it did a week ago because of the agreement reached between (the United States and China) and the truce they have reached in their trade and the resumption of serious trade negotiations,” Falih said.
The meeting on Tuesday will also discuss a charter for long-term cooperation between OPEC and non-OPEC producers.


Saudi Aramco sets IPO share price between 30-32 riyals

Updated 17 November 2019

Saudi Aramco sets IPO share price between 30-32 riyals

  • Saudi Aramco intends to buy $1 billion worth of shares for employee

DUBAI: Saudi Aramco’s multibillion-dollar initial public offering (IPO), probably the biggest in history, shifted to full gear as its share price was announced and subscription to the world’s biggest oil company commenced on Sunday.

Saudi Aramco set an indicative share price between 30 and 32 riyals for the 1.5 percent of its shares – or about 3 billion shares of its 20 billion regular shares – that it would offer for  the domestic part of its public offering. The blockbuster IPO could be worth least $24 billion, and values the state-owned oil giant at up to $1.71 trillion.

The offering – or book-building – period for institutional subscribers, which started today, closes on December 4 while the retail offering for individual investors will begin on November 21 and will end on November 28.

The final pricing for the Aramco shares would be announced on December 5.

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For more of our coverage of the Aramco IPO, click here.

To view key Aramco IPO documents, click here.

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Samba Capital & Investment Management Company has been designated as issue manager while National Commercial Bank, Saudi British Bank, Samba Financial Group, Saudi Investment Bank, Alawwal Bank, Arab National Bank, Albilad Bank, Aljazira Bank, Riyad Bank, Al Rajhi Bank, Alinma Bank, Banque Saudi Fransi and Gulf International Bank were named as receiving banks.

If there are applications for more than the 0.5 percent on offer — amounting to 1 billion shares — allocations to private investors will be scaled back proportionate to demand; if there are fewer applications than the 0.5 percent when all maximum applications are satisfied, private investors can have the over-payment refunded either in cash via the receiving banks or in the form of extra shares in Aramco.

There is an incentive mechanism in the IPO whereby Saudi investors will receive a bonus one-for-ten allocation of shares, up to a maximum of 100 shares, if they do not sell shares in the market for a period of six months after dealings begin in December, at a date still to be determined.

Saudi Aramco also intends to buy $1 billion worth of shares for employees under a plan to incentivize executives and staff members alongside the IPO next month.

The plan — which was disclosed in the IPO prospectus — will involve Aramco buying the shares from the government and making them available for employees under special terms.