Arabian Business, Thursday, May 21, 2020 | Ramadan 28, 1441
Saudi Aramco is first oil major to regain pre-price-war share price
Saudi Aramco is the first major global oil producer to see its stock
recover to the level it traded at before the price war between Russia and Saudi
Aramco climbed 3.1% in Riyadh on Tuesday, advancing for a record sixth day
alongside an extended increase in the price of crude. The stock has gained each
session since the company announced it would retain dividend payouts, despite a
drop in first-quarter profit.
Aramco’s recovery has been achieved on much smaller share volumes than its
international counterparts, with less than 2% of the Saudi company’s stock
available for trading.
An average of about $35 million worth of Aramco shares changed hands each
session last week, rising to $100 million on Monday. That compares with
yesterday’s Exxon Mobil Corp. share turnover of $1.4 billion.
Much of Aramco’s stock sold during its initial public offering in December went
to locals, who stand to receive bonus shares if they maintain their holdings for
six months. The shares are now 20% higher than this year’s lowest close on March
Shares in oil companies plummeted in March after an OPEC+ meeting ended without
a deal to curb production, an impasse that was followed by an all-out price war
between Saudi Arabia and Russia.
The Covid-19 pandemic disrupted global energy demand as economies shut down,
prompting a collapse in the oil market. Crude futures have since recovered as
governments started to ease lockdown measures and after major suppliers
eventually agreed to production cuts.
While Aramco stuck to its dividend plans, Royal Dutch Shell Plc slumped last
month after cutting its payout for the first time since the Second World War.
Total SA offered to pay part of its final 2019 dividend in shares, rather than
“While oil-output cuts across the world have helped push prices above $30 a
barrel, we remain cautious about the pace of a recovery in oil demand and
compliance with the OPEC+ pact,” said Bloomberg Intelligence analysts Salih
Yilmaz and Rob Barnett. They added that price volatility may persist, “given
uncertainty over the relaxation of coronavirus pandemic lockdowns.”