Saudi Arabia

[dan_s]

On 10/13/2017, Reuters reported Saudi Aramco is considering the sale of a stake to a Chinese investor as plans for its highly anticipated international public offering are pushed beyond its 2018 target, sources familiar with the matter said on Friday. The initial public offering is expected to be the world's largest stock sale, and is a key component of the Saudi government's economic reform program which aims to diversify the desert kingdom away from its reliance on oil exports. A private placement of shares in the state oil company to a Chinese investor is being evaluated as a precursor to the international IPO, according to two sources who spoke on condition of anonymity as the information was not public.

The move would provide Saudi Arabia with cash to help implement the National Transformation Program (NTP), as the reform package is formally known, according to one of the sources. The NTP comprises a number of difficult economic adjustments for Saudi Arabia - including removing some state subsidies and raising taxes - that are aimed at taming huge budget deficits caused by lower oil prices. Concerns about the impact of the austerity measures on the economy are rising. While data earlier this month showed the deficit was shrinking, the Saudi economy entered recession in the second quarter, consumer prices are falling and unemployment among Saudis is at 12.8 percent.
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Saudi Arabia is suffering from low oil prices and it is much worse in all of the other OPEC nations. They will extend their agreement to limit production because can not afford another dip in oil prices below $50/bbl. Brent is now trading at $58/bbl. Saudi Arabia needs Brent over $60. - Dan