Saudi Arabia is getting deadly serious about the stock market flotation of state oil giant Aramco, just not in London. Once tipped as a potential host for what could be the world’s largest initial public offering, Brexit chaos and the prospect of Jeremy Corbyn seizing power have significantly diminished the City’s chances of becoming the international home for Aramco’s shares. Missing out would be a blow to prestige, but it could also be a blessing in disguise. Aramco – which the kingdom’s Crown Prince Mohammed bin Salman believes is worth $2 trillion – would tether the overall performance of the London Stock Exchange’s main market dangerously to the unpredictable price of crude along with the decisions of OPEC and its allies. Despite the cartel striking a pact with Russia to restrict output and boost prices, Brent crude trading at around $60/b is still at a level almost 40% lower than it was five years ago. British oil companies such as BP and Royal Dutch Shell already account for around 15% of the total market capitalization of the FTSE 100, which is a tolerable risk for tracker funds. The addition of Aramco – which pumps four times more crude than both… continue reading
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Source: CTRM Center