The global oil market is close to regaining stability, Saudi Arabia’s Crown Prince Mohammed said at a meeting with President Trump at the White House ahead of bilateral talks on a number of issues.
The Crown Prince added that Saudi Arabia had reserves equal to 84 years worth of supplies. Mohammed is on a two-week visit in the United States and oil is naturally high on his agenda, what with the Aramco IPO coming next year.
With regard to this, there will hardly be any major news coming during the prince’s visit: last week Bloomberg’s Javier Blas reported that not all U.S. investors that Saudi officials approached with the Aramco pitch were interested in becoming shareholders in the world’s largest oil company by reserves.
A couple of days later it surfaced that Aramco was giving up its plans for an international listing, at least for the time being. Until that moment, it had remained uncertain where that listing would take place, with New York, London, and Hong Kong on the short list. Prince Mohammed personally favored New York, although Energy Minister Khalid al-Falih was wary of litigation risks connected with a possible New York listing.
The Crown Prince is not alone in seeing a stable oil market: all the latest accounts of the OPEC+ production cut deal point towards much lower global supply, which was the purpose of the deal. But now there is a growing number of voices suggesting that the group might want to stick to the cuts beyond December 2018 because of the consistent growth in U.S. shale oil production.
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Meanwhile, opinions are beginning to diverge on whether Saudi Arabia even needs to list Aramco. Some, like Bloomberg’s Liam Denning, estimate that Aramco needs oil at US$80 a barrel to make the IPO work as planned, giving the company a total value of US$2 trillion.
Others, however, including TankerTrackers co-founder Samir Madani and international oil economist Mamdouh G. Salameh, believe the current price level for oil benchmarks is high enough to remove the need for an IPO altogether.
Oil prices rose after the meeting in the White House began on expectations that the prospects of the United States pulling out of the Iran deal would increase after Trump talks to Mohammed.
By Irina Slav for Oilprice.com