Saudi Aramco expects to see oil prices stabilize

Despite falling crude price, the number of millionaires in Saudi Arabia is expected to increase 70 per cent by 2020, according to Credit Suisse Group.

But several sources familiar with official thinking told Reuters that Aramco’s massive size, and the confidentiality surrounding it as the main instrument of the kingdom’s oil policy, pose hurdles to any listing of the parent firm.

“We are seeing more growth in wealth preservation and diversification of risk among clients at the moment”, said Mark Mills, managing director and investment counselling head for Middle East and North Africa.

“If there are short term adjustments that need to be made and if other producers are willing to collaborate, Saudi Arabia will also be willing to collaborate”, he said.

He said Saudi Arabia has the scale and capability to sustain the current slump in prices for “a long, long time” but that “obviously, we don’t wish for lower prices”.

Al-Falih also says the potential share flotation could take place on local or global markets.

Saudi Arabia’s Tadawul index, which lost over 20 per cent of its value during the first three weeks of 2016, gained 6.7 per cent on opening and was trading up 2.7 per cent pre-close.

The state-owned company has begun studying “various options to allow broad public participation in its equity” in either the company as a whole or a bundle of its downstream subsidiaries.

The company won’t offer shares in its crude reserves, which belong to the state, he said Sunday in an interview on Al Arabiya television.

“Demand will grow, as it has already started in 2015, and there will be a period not far into the future (when) demand will catch up with supply”, he was quoted by the news wire as saying.

Oil still made up 73 percent of revenue past year, the finance ministry has said, down from about 90 percent previously.

“Saudi Aramco can navigate lower oil prices without even resorting to these sort of assets (IPO)”, global chief economist at Standard Chartered Bank Marios Maratheftis said in a recent Gulf Intelligence survey.