Oil rallies for fifth consecutive day on Opec deal extension optimism
On Tuesday, Saudi Aramco's chief said the kingdom would look to list the company "very soon"
Oil remained buoyant for the fifth consecutive day following weeks of uncertainty after Saudi Arabia’s new energy minister, the de facto leader of Opec, indicated continued support for an output curb pact.
Brent was up 0.77 percent, at $63.07 per barrel at 3:15pm UAE time, while US crude (WTI) gained 0.5 per cent and was trading at $58.34 per barrel.
Energy markets rallied as Saudi Aramco, the world’s largest oil exporting company, reiterated it would be targeting an initial public offering soon, with a domestic listing being the firm’s priority.
"From Aramco's side, we are ready for whatever the decision is. [The] primary thing is to list locally but we are also ready for other jurisdictions but it is a shareholders' decision,” Aramco chief executive Amin Nasser told reporters in Abu Dhabi on Tuesday.
"We are ready to list wherever the shareholder decides. We are prepared for different jurisdictions,” he added.
Saudi Aramco’s planned listing of $100 billion worth of its shares has been rife with speculation over the last couple of weeks after reports emerged that the country could split up the offering in two listings. A domestic listing could happen as soon as the end of the year, with a foreign listing likely to take place in Tokyo, according to the Wall Street Journal.
Mr Nasser said the listing could happen “very soon”.
"What we have said is Aramco is ready for listing whenever the shareholder's make a decision to list,” he said.
Saudi Arabia’s plans to list Aramco, a key component of the kingdom’s Vision 2030 policy, has gathered pace over the past couple of weeks. The company had its first investor call in August in a bid to open up discussion on its financial results. Last week, the kingdom replaced former energy minister Khalid Al Falih as chairman of Aramco, with Yassir Al Rumayyan, the head of the kingdom’s sovereign Public Investment Fund. The move comes as Saudi Arabia looks to avoid any conflict of interest between the regulator and the company in the run-up to the IPO, which is set to be the world’s largest.
Oil gained on Tuesday after bullish sentiment lifted the market with Chinese crude imports for August increasing 10 per cent year-on-year, according to data from Reuters.
Markets remained bullish after the new Saudi energy minister Prince Abdulaziz bin Salman indicated that the kingdom would continue to balance the markets through Opec and said there would be no change in the country's policy following his appointment. He also dismissed concerns about slowing demand saying oil markets were driven by a spate of negative news.
"It’s not about demand rising or not rising. The market is now driven by negative sentiment emanating from negative news. I don’t believe demand has been impacted,” Prince Abdulaziz told reporters in Abu Dhabi on Monday on the sidelines of the World Energy Congress.
Opec+, the alliance led by Saudi Arabia and Russia, will meet in Abu Dhabi on Thursday to review compliance with a pact to cut 1.2 million barrels per day of production. The agreement, which has been in place since January, is expected to hold until March.
Organisations such as the International Energy Agency have said global demand growth would be slower than expected for the second half of the year, because of mounting concerns over trade tensions between the US and China, the world’s biggest buyer of oil. The IEA expects demand growth for crude to reach 1.1 million bpd in 2019 and 1.3 million bpd in 2020, a reduction of 100,000 bpd for this year and 50,000 bpd for next year.
Updated: September 10, 2019 04:18 PM