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Last week began with protests in Iran after the government announced the decision to double gas prices.

Since November 15, Iran has also introduced quotas for retail fuel sales. The Iranian authorities said their measures were aimed at helping the citizens in need. The protests began in at least ten cities in Iran, while the situation in Sirjan was most aggravated, where residents tried to attack the oil depot, but they were prevented by police. By decision of the Iranian authorities, gasoline prices at gas stations unexpectedly doubled, from 15 thousand to 30 thousand Iranian riyals (about 70 US cents). At 50%, up to 15 thousand riyals (a little more than 20 rubles), the preferential price for gasoline increased as part of the quota for each person. According to the new rules promulgated by the National Oil Distribution Company of Iran (NIOPDC), at this price, car owners will receive up to 60 liters of gasoline per month, motorcycle owners - 25 liters. For taxi employees, a quota of 400 liters is provided.

One of the most anticipated events at the oil market, the IPO of Saudi Aramco, the state-owned oil company of Saudi Arabia, faced unexpected hurdles last week. The company, which plans to sell 1.5% of its shares on the Saudi stock exchange, has canceled meetings with investors in the United States, Britain, Europe and Japan, Bloomberg reports citing bankers who are preparing the deal. Despite the planned events in the framework of the road show, even after reducing the estimated cost of Saudi Aramco, it was not possible to find potential buyers in the right amount.

Initially, Riyadh was counting on the sale of a 5% stake in the oil giant, which produces every tenth barrel on the planet. Later, the bar was reduced to 3%, and in 2019, even half. The stock price was set in the range of 30-32 riyals apiece (8-8.5 dollars), which implies the total value of the company at 1.7 trillion dollars. And although this estimate is below the 2 trillion voiced in 2016 by Crown Prince Mohammed bin Salman, it still seems overstated to large institutional investors. The price of 1.5 trillion would be attractive to Western buyers, Bloomberg sources say. With the current share price and plans to pay $ 75 billion in dividends, Saudi Aramco loses to the Western oil giants: its dividend yield will be 4.4-4.7% versus 5% for Exxon Mobil and 6.4% for Shell. But with such an assessment, Riyadh will not be able to go down in history: the kingdom hoped that the Aramco IPO would bring $ 25.6 billion and break the record of the Chinese Alibaba Group, which managed to raise 25 billion in 2014. De facto, China will become the only major foreign investor in the IPO Saudi Aramco, whose state-owned companies, according to Bloomberg, plan to invest from 5 to 10 billion dollars. Negotiations are ongoing with Middle Eastern funds and Russia. Riyadh will have to attract the bulk of funds in the domestic market, including from retail investors. For them, the authorities introduce concessions, allowing them to buy shares with a leverage of two to one (that is, on credit - up to 100% of their own funds).

In the second half of the week, oil prices collapsed by almost 3%. Apparently, the slide game began without waiting for the IPO Saudi Aramco. Sales took place by and large without any important news - mainly amid rumors. Many analysts believe that the market has long been preparing for a decline and this moment has come. In addition, production in the United States updates historic highs, while the United States has been exporting more than it has been importing for two consecutive weeks. If OPEC continues to reduce its share in the global market, American oil may well take this place. In other words, competition is becoming increasingly fierce, and this is unlikely to support prices. In addition, the mood in the US stock market is gradually deteriorating. In the case of a serious correction, there is a high probability that it will pull the oil market.

 

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