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Aramco Regains Pre-Price-War Share Price

Saudi Aramco sees its stock recovering to the level it traded before the price war between Russia and Saudi Arabia. It is the first major global oil producer to regain pre-price-war share price.

The oil company’s stocks went up by 3.1% in Riyadh on Tuesday, advancing for a record sixth day. This is alongside an extended increase in the price of crude. 

The stock has gained each and every session, since the company announced it would retain dividend payouts. This is despite a drop in first-quarter profits.

The recovery of Aramco has been achieved on much smaller share volumes than its international counterparts. Less than 2% of the Saudi company’s stock is available for trading. 

An average of about $35 million worth of its shares in the stock market changed hands each session last week. It rose to $100 million on Monday, in comparison with yesterday’s Exxon Mobil Corp share turnover of $1.4 billion.

Much of Aramco’s stocks sold during its initial public offering in December went to locals. These locals stand to receive bonus shares if they maintain their holdings for six months. The shares are now 20% higher than its lowest close back on March 16.

Aramco Sticks to its Dividend Plans

Stock trading reported shares in oil companies plummeting in March as the OPEC+ meeting ended without a deal to curb production. This was 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. This prompted a collapse in the oil market. 

Crude futures have since recovered as governments started to ease lockdown measures. They were also boosted after major suppliers eventually agreed to production cuts.

Aramco stuck to its dividend plans. Royal Dutch Shell Plc slumped in April 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 cash.

Intelligence analysts, Salih Yilmaz and Rob Barnett, said oil-output cuts across the world helped push prices above $30 a barrel. They remain cautious about the pace of recovery in oil demand and compliance with the OPEC+ pact. 

Price volatility may persist, given the uncertainty over the relaxation of coronavirus pandemic lockdowns, they added.

Meanwhile, according to analysts, Saudi Aramco has often concentrated production cuts on offshore fields which produce heavy crude. This is to avoid offering big discounts for heavy oil. 

That could point to a relative increase in exports of already oversupplied lighter grades, as production is curbed. That could potentially worsen the current global glut.

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