Aramco shares plunge below IPO price for first time

Dubai — Saudi Aramco shares on Sunday closed below the IPO price of Riyals 32 ($8.53) for the first time amid investor fears of a further decline in oil prices that tumbled 10% on Friday after Saudi Arabia and Russia failed to strike a deal to extend and deepen production cuts set to expire at the end of March.

Aramco's shares opened at Riyals 31.90 and ended the day 9% lower at Riyals 30, according to the Saudi stock exchange or Tadawul.

Before Sunday, Aramco's shares were trading at Riyals 33, amid weak oil prices sparked by the outbreak of the deadly coronavirus and its impact on global oil demand.

The 23-member alliance of OPEC+, led by Saudi Arabia and Russia, failed on Friday to reach an agreement on extending or deepening oil production cuts of 1.7 million b/d that end in March, leaving members to pump at will starting in April.

Russia, which leads the 10 non-OPEC members of the alliance, refused to sign on to an agreement to cut another 500,000 b/d, alongside a 1 million b/d additional cuts from OPEC members, who agreed on Thursday to the conditional cut. Russia rejected being cornered into a deal, putting the alliance forged in 2016 at risk of falling apart for the first time.

The failure of OPEC kingpin Saudi Arabia and Russia to broker a deal stoked fears of the price destruction that ensued in 2014 after both countries jostled for market share with US shale oil producers.

Brent prices in 2014 fell from highs of $115/b in June to less than $70/b in December after a November meeting of OPEC members failed to reach an agreement on production curbs.

Aramco, which listed its shares on December 11, scored the world's biggest IPO of $29.4 billion, beating the previous record held by Chinese e-commerce giant Alibaba, which raised $25 billion in 2014.

(Updates with closing Aramco share price.)