Saudi Aramco Surges on Strong Demand in Secondary Share Offering

Saudi Aramco, the world's largest oil producer by volume, witnessed its share price climb on the first day of trading after a successful secondary share offering. The offering, which concluded on June 6th, 2024, is expected to raise over $11. 2 billion for the Saudi Arabian government.

The strong performance in the share price indicates continued investor confidence in the company's future prospects. Shares opened at 27. 95 riyals ($7. 58) on Sunday, the first trading day after the offering, and rose steadily throughout the day. By mid-morning, they had surpassed the offering price of 27. 25 riyals, set at the lower end of the pre-determined range. The share price closed the day at 28. 60 riyals ($7. 63), signifying a 2. 6% increase from the offering price.

This positive performance comes amidst a backdrop of high global oil prices, fueled by the ongoing war in Ukraine and potential supply disruptions. As a major oil producer, Saudi Aramco is well-positioned to benefit from this environment. The company is also investing heavily in renewable energy sources, aiming to diversify its revenue streams and meet growing environmental demands.

The secondary share offering attracted significant interest from international investors, with over 58% of the shares allocated to them. This is a substantial increase from the 23% allocated to foreign investors during Aramco's initial public offering (IPO) in 2019, which was the world's largest at the time. This strong international participation reflects growing confidence in the Saudi Arabian economy and the Aramco's long-term growth potential.

The successful share offering and subsequent rise in share price are positive signs for the Saudi Arabian government. The additional capital raised will contribute to the country's ambitious economic diversification plans, which aim to reduce dependence on oil revenue. The Aramco offering has also served to solidify the company's position as a global energy leader, attracting significant interest from international investors.

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