4 ms·

I think this IPO could happen sooner than you think. The Saudis seem to have quite a bit of influence on the current US presidential administration and I wouldn

I think this IPO could happen sooner than you think. The Saudis seem to have quite a bit of influence on the current US presidential administration and I wouldn't be surprised if the Saudis played a role in the decision to sanction Venezuela, who was at the time was the #1 oil exporter in the world, and the decision to sanction Iran, another huge oil exporter. They've recently coordinated oil supply cuts through OPEC and also isolated Quatar, another large oil exporter. I think the claim that peak oil is behind us is reasonable conjecture, especially with the rise of economically viable alternative energy sources. I think the Saudis are well aware of this and they're currently making what looks like a very effective short term play at cashing out as much as they can. A little side bit to this is that Saudi Arabia's King Salman named his 31-year-old son Mohammed bin Salman (MS) as crown prince on June 21, 2017, removing his nephew, Mohammed bin Nayef, as heir and one of they key platforms on which MS has sought to earn favor from other ranking figures has been the promise to make this IPO happen asap. The longer it takes the bumpier his transition to power will be, so you can bet he is well incentives to cut the needed deals to drive that price of oil as high as he can as fast as he can.

cepth 8y ago
Nothing is impossible, so sure it's not impossible I'm wrong, and Aramco goes public soon. Given that they've already signaled that it won't happen this year, you do wonder why 2 years on there's no meaningful progress. They've announced the underwriting banks, but there's been no roadshow, no news of meetings with institutional investors. I still think it's quite unlikely you could float a $100 billion IPO today. IPO aside, I think several of your claims about geopolitics and oil in general are at the very least heavily debatable, and in some cases just factually incorrect. -------------------- > The Saudis seem to have quite a bit of influence on the current US presidential administration and I wouldn't be surprised if the Saudis played a role in the decision to sanction Venezuela The stated reason for the sanctions was because the US and its allies alleges that Venezuela had sham elections. The EU is doing the same: https://www.aljazeera.com/news/2018/05/eu-prepares-hit-venezuela-sanctions-180528140548981.html https://www.aljazeera.com/news/2018/05/eu-prepares-hit-venez.... In 2014, H.R. 4587 passed the House. The bill's rationale was to sanction Venezuelan officials who were alleged to have retaliated against opposition voters and politicians. The bottom line is that US-Venezuelan relations have been fraught since the days of Chavez. -------------------- > ...and the decision to sanction Iran, another huge oil exporter Maybe? Trump ran quite openly on punishing Iran and tearing up the nuclear deal. I'm not sure if you can attribute this to Saudi influence given he and his family have business ties and taken meetings with everyone from the UAE to Bahrain to Qatar. -------------------- > They've recently coordinated oil supply cuts through OPEC and also isolated Quatar, another large oil exporter. Qatar exports ~1.25 million barrels a day. The Saudi-Qatari standoff has little to do with oil. Qatar sits on one of the world's largest natural gas fields: https://www.vox.com/world/2017/7/2/15882682/saudi-arabia-qatar-natural-gas-boycott https://www.vox.com/world/2017/7/2/15882682/saudi-arabia-qat.... Saudi Arabia and Qatar are jockeying for political influence in the Middle East, over everything from the war in Yemen to Qatar's friendliness with Iran. This is analogous to how the war in Yemen was for the longest time a proxy war between Saudi Arabia and its allies vs Iran. Scroll down to the "Price and Production" section of this Bloomberg visualization: https://www.bloomberg.com/graphics/opec-production-targets/ https://www.bloomberg.com/graphics/opec-production-targets/. Notice how OPEC cut production sharply in late 2016. Is there any trend between OPEC output and overall oil prices? What's changed? The US is now the largest oil exporter in the world: https://www.businessinsider.com/us-will-export-oil-most-in-world-2018-5 https://www.businessinsider.com/us-will-export-oil-most-in-w.... It's simply the case that OPEC doesn't hold the same sway that is used to. Look at the chart labeled "Shares of primary energy" here: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html https://www.bp.com/en/global/corporate/energy-economics/stat.... Natural gas is trending upwards, while oil is flat in recent years, and down quite significantly compared to past decades. -------------------- One nit-picky thing, Mohammed bin Salman goes by MBS. I've yet to hear anyone call him MS.
- chadmeister 8y ago
  Hey that was a very thoughtful response! You make some very good points. I always appreciate learning something new, thank you. And you're right it's MBS, I couldn't quite remember

cepth 8y ago

Nothing is impossible, so sure it's not impossible I'm wrong, and Aramco goes public soon. Given that they've already signaled that it won't happen this year, you do wonder why 2 years on there's no meaningful progress. They've announced the underwriting banks, but there's been no roadshow, no news of meetings with institutional investors. I still think it's quite unlikely you could float a $100 billion IPO today. IPO aside, I think several of your claims about geopolitics and oil in general are at the very least heavily debatable, and in some cases just factually incorrect. -------------------- > The Saudis seem to have quite a bit of influence on the current US presidential administration and I wouldn't be surprised if the Saudis played a role in the decision to sanction Venezuela The stated reason for the sanctions was because the US and its allies alleges that Venezuela had sham elections. The EU is doing the same: https://www.aljazeera.com/news/2018/05/eu-prepares-hit-venezuela-sanctions-180528140548981.html https://www.aljazeera.com/news/2018/05/eu-prepares-hit-venez.... In 2014, H.R. 4587 passed the House. The bill's rationale was to sanction Venezuelan officials who were alleged to have retaliated against opposition voters and politicians. The bottom line is that US-Venezuelan relations have been fraught since the days of Chavez. -------------------- > ...and the decision to sanction Iran, another huge oil exporter Maybe? Trump ran quite openly on punishing Iran and tearing up the nuclear deal. I'm not sure if you can attribute this to Saudi influence given he and his family have business ties and taken meetings with everyone from the UAE to Bahrain to Qatar. -------------------- > They've recently coordinated oil supply cuts through OPEC and also isolated Quatar, another large oil exporter. Qatar exports ~1.25 million barrels a day. The Saudi-Qatari standoff has little to do with oil. Qatar sits on one of the world's largest natural gas fields: https://www.vox.com/world/2017/7/2/15882682/saudi-arabia-qatar-natural-gas-boycott https://www.vox.com/world/2017/7/2/15882682/saudi-arabia-qat.... Saudi Arabia and Qatar are jockeying for political influence in the Middle East, over everything from the war in Yemen to Qatar's friendliness with Iran. This is analogous to how the war in Yemen was for the longest time a proxy war between Saudi Arabia and its allies vs Iran. Scroll down to the "Price and Production" section of this Bloomberg visualization: https://www.bloomberg.com/graphics/opec-production-targets/ https://www.bloomberg.com/graphics/opec-production-targets/. Notice how OPEC cut production sharply in late 2016. Is there any trend between OPEC output and overall oil prices? What's changed? The US is now the largest oil exporter in the world: https://www.businessinsider.com/us-will-export-oil-most-in-world-2018-5 https://www.businessinsider.com/us-will-export-oil-most-in-w.... It's simply the case that OPEC doesn't hold the same sway that is used to. Look at the chart labeled "Shares of primary energy" here: https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/primary-energy.html https://www.bp.com/en/global/corporate/energy-economics/stat.... Natural gas is trending upwards, while oil is flat in recent years, and down quite significantly compared to past decades. -------------------- One nit-picky thing, Mohammed bin Salman goes by MBS. I've yet to hear anyone call him MS.

chadmeister 8y ago
Hey that was a very thoughtful response! You make some very good points. I always appreciate learning something new, thank you. And you're right it's MBS, I couldn't quite remember