Nixse
0

The oil industry and climate change

Oil prices increased on Tuesday. The price of Brent crude oil rose by 25 cents to $59.99 a barrel. The price of another benchmark, which is the West Texas Intermediate, also increased on August 20. Its price rose by 19 cents to $56.40 a barrel. It is a well-known fact that oil prices depend on several factors. However, this time, there are two primary reasons which contributed to the rise in oil prices.

The first one is the hope that the U.S. and China will be able to solve their disagreement. Let’s not forget that the U.S. and Chinese markets are significant for the global oil industry. At the moment, the U.S. is the biggest oil producer, whereas China is one of the largest consumers. It means that trade war between the biggest economies in the world is a severe problem for the oil industry.

Even though, not directly related to the oil prices but connected to the trade war is the U.S. government’s decision. According to this decision, U.S. companies received permission to sell the parts and components to Huawei. Thanks to another 90-day reprieve Chinese tech giant will continue buying components.

Saudi AramcoSaudi Aramco’s plan to offer IPO

The oil industry is facing other problems, as well. One of the biggest challenges for oil prices is climate change. The trade war is a serious issue, but in the long-run, climate change will become an essential problem for the industry. Stricter regulations and gradual introduction of electric cars will significantly affect oil prices.

Saudi Arabian state company, Saudi Aramco’s plan to offer Initial Public Offering (IPO) might change due to climate change. Saudi Aramco is the most profitable oil company. Company’s oil reserves are enough to sustain the oil production for the next 50 years. However, climate change might alter its plans. Three years ago, Saudi Crown Prince Mohammed Bin Salman announced that Saudi Aramco would offer the IPO. Despite this statement, this did not happen to this day.

Some analysts argue that the company should speed up the process as otherwise, the planned IPO might become less attractive to the investors. According to various sources, the company’s approximate price is from $1.5 trillion to $2 trillion. Crown Prince Mohammed thinks that the price of the company is $2 trillion. The disagreement about the price might further delay this process. Initial release date changed from 2017 to 2018. Right now, the deadline is 2020-2021.

Investing in the most profitable company in the world is a good idea. However, as the interest for the cleaner energy sources continues to rise, this might cause additional problems for Saudi Aramco.

Saudi Aramco claims that oil and gas will remain an important source of energy for the next several decades. They think that it will take a while before alternative energy sources can produce the same amount of energy. However, in the modern world and especially in Europe, it will be tough to convince investors.

One of the main arguments of Saudi Aramco is financial results. For example, the company’s net income in 2018 was $111 billion.

Oil prices are on the rise. Nevertheless, the oil industry is facing many problems. Saudi Aramco should hurry up if it wants to earn more money by offering an IPO.

  • Support
  • Platform
  • Spread
  • Trading Instrument
Comments Rating 0 (0 reviews)


You might also like

Leave a Reply

User Review
  • Support
    Sending
  • Platform
    Sending
  • Spread
    Sending
  • Trading Instrument
    Sending