Future oil prices key to Saudi Aramco IPO

Oil price futures could be a clue to estimating the timing of Aramco’s massive IPO.

Saudi Arabia's Crown Prince Mohammed bin Salman will decide the exact timing of the sell-off.
Saudi Arabia's Crown Prince Mohammed bin Salman will decide the exact timing of the sell-off.

Future oil price predictions are likely to have a key role in Saudi Aramco’s decision as to when to trigger its initial public offering (IPO), according to sources cited by Reuters.

The firm, which is thought to be planning to sell off as much as 5% of its shareholding in a bid to generate around $100bn towards further economic diversification projects, is likely to be studying anticipated price forecasts for the next 12-24 months.

The sources told Reuters the oil giant would be seeking oil futures around $10 per barrel higher than current levels, with $70 a barrel a possible threshold. But oil price futures for one year’s time are just over $60 a barrel, a drop of $4 on current spot prices, while forecasts for two years’ time indicate a price of $57 a barrel.

The Saudi Arabian Oil Ministry and Saudi Aramco itself were not available for comment. The firm has consistently stated the IPO will take place when the time is right. Crown Prince Mohammed bin Salman is ultimately likely to decide when the sell-off will occur.

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