Saudi Aramco Plans Major Share Offering

Saudi Arabia's state oil company, Aramco, is reportedly planning to sell between $10 billion and $20 billion worth of its stock in a new offering, potentially as soon as this week. 

Currently, the Saudi state and its sovereign wealth fund, the Public Investment Fund, hold the majority of Aramco, with only 1.5% of the company publicly traded on the Tadawul, the kingdom’s stock exchange, following its initial public offering in 2019. This IPO raised a record $29.4 billion, making it the largest IPO in history.

This new offering is crucial for Saudi Arabia, which is heavily investing in multi-trillion dollar megaprojects while dealing with lower oil revenues. In early May, the kingdom recorded its sixth consecutive quarterly budget deficit. 

The anticipated share sale is expected to ease some of the financial strain on the kingdom, at least in the short term. Saudi Arabia has forecasted a budget deficit of 79 billion Saudi riyals ($21 billion) this year, with projected fiscal deficits continuing into 2025 and 2026.

Aramco is still the world's largest oil company in terms of both daily oil production and market capitalization. The potential stock sale is strategically timed to support Saudi Arabia's ambitious spending plans amid fluctuating oil income. 

The reported offering could significantly relieve the kingdom's finances, highlighting the strategic importance of Aramco's financial maneuvers in supporting national economic objectives. Investors and market analysts will closely watch the outcome of this potential offering.