Global factors that have sent oil prices down have caused shares of Middle Eastern oil giant Saudi Aramco to hit its lowest point since it began trading. Saudi Aramco began trading in December of last year, setting a new global record after it hit a valuation of $2.03 trillion after a massive surge during its first day of trading.
During intraday trading on Sunday, Saudi Aramco shares hit a low of 32.50 riyals, or $8.66, per share. This broke the company's previous low of 32.60 riyals. At the lowest price, the company's shares were down by 2.55 percent.
Fortunately, the share price is still above the company's original IPO price of 32 riyals when it listed last year. During its debut, the company raised a record $29.4 billion by selling a total of 1.7 percent of its stake to the public.
Market analysts have pointed out that the dip in the company's stocks could be temporary given the recent announcement from the European Commission. Saudi Arabia received unconditional approval from the commission last week for its planned majority stake acquisition of petrochemicals group Saudi Basic Industries Corp (SABIC).
The latest approval brings the state-owned oil giant closer to its plans of acquiring a 70 percent stake in the SABIC using Saudi Arabia's Public Investment Fund (PIF). The acquisition itself is also part of the company's wider strategy of diversifying into chemicals. For Saudi Arabia, the acquisition will result in a new cash flow source for the PIF, which it can use for its other investment plans.
The deal is expected to inject billions of dollars into the PIF, which it will apparently use to bolster and diversify the country's economy beyond just oil products. Part of the funds will be used to build a new mega business zone, which will reportedly be located in the northwestern part of Saudi Arabia.
In a press statement released after the EU antitrust approval, Saudi Aramco stated that with the clearance in all jurisdictions, it will now just have to complete customary closing conditions as outlined in the Share Purchase Agreement. Under the agreement made with SABIC back in October, Saudi Aramco will intentionally delay full payment for the stake purchase until September 2025. Saudi Aramco will, however, be required to immediately pay a third of the $69.1 billion price tag in cash to the kingdom's sovereign wealth fund. Full clearance of all agreements is expected to be completed by the middle of this year.
