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Analyst Says Saudi Aramco Shares Could Hit $0 in 2020

December 18, 2019
Reading time: 4 minutes

YouTube

YouTube

While Saudi Aramco is riding high right now with a US$2-trillion valuation after its recent initial public offering, a veteran oil and gas analyst and financial journalist says the stocks could lose all their value in the next year, driven to zero by Donald Trump’s impulsiveness and OPEC’s waning control over global oil markets.

“Within the coming year Aramco shares could well be valued at US$0,” Simon Watkins writes for Oilprice.com. And not because of the multitude of failings investors were arm-twisted into ignoring when Saudi Arabia finally issued the IPO—three years late, at about one-third of its originally intended value, and with no foreign listings.

“The reason for this is not connected to the fact that Aramco does not actually own any of the sites from which it extracts oil and gas—not a single field, not a single well,” Watkins writes. “It is not connected to the fact that it is used as a conduit to fund the latest harebrained social or vanity projects that are nothing to do with its core business—including developing a $5-billion ship repair [complex] and creating the King Abdullah University of Science and Technology. And nor is it connected to the mathematically impossible assertion by the Saudis that their oil reserves have remained at basically the same level for the last 30 or more years despite Saudi pumping an average of nearly three billion barrels of oil every year from 1973 to the end of 2017—totalling 132 billion barrels—with no new significant oil finds being made during that period.”

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It’s not related to the multiple class action suits the desert kingdom still faces for the 15 of 19 9/11 hijackers who were Saudi nationals, nor the CIA’s conclusion that Crown Prince Mohammad bin Salman personally ordered the brutal dismemberment and murder of journalist Jamal Khashoggi, though those small details “were key reasons why no listing for Aramco took place in the U.S., and indeed the UK.”

The “killer blow”, Watkins says, would come from the No Oil Producing and Exporting Cartels (NOPEC) bill currently making its way through the U.S. Congress, which would make it illegal to artificially cap oil and gas production or fix prices. That kind of activity was the very reason producers formed the Organization of the Petroleum Exporting Countries (OPEC) in 1960. If the U.S., and eventually the UK, adopt anti-trust measures, Aramco could either be accused of “collusive price-fixing”, or abide by rules that would require the country to give up its leadership of OPEC.

Legal sources in Washington, DC told Oilprice.com the bill would open Saudi assets worth about $1 trillion to seizure, and “would also mean that trading in Aramco’s products—including oil and gas—would be subject to the anti-trust legislation, meaning the prohibition of sales in U.S. dollars (oil, of course, is priced in U,S, dollars),” Watkins writes. It “would also mean the eventual break-up of Aramco into much smaller constituent companies that are not capable of influencing the oil price, if the Saudis could offer up no other way of complying with the anti-trust laws.”

Similar legislation has been on the books but never passed in the U.S. since at least 2007. But after years of defending bin Salman, Trump has apparently changed his tune in the last few months. Watkins says the former reality TV star and failed real estate magnate was displeased when Saudi Arabia joined with Russia to drive up global oil prices earlier this year, then miffed again when his Russian sponsor and mentor Vladimir Putin received the trappings of a full state visit on a trip to Riyadh in October.

Then again, judging by the three-year history of Trump’s avid support for Saudi Arabia detailed by Washington Post foreign analyst Ishaan Tharoor, Watkins may be overestimating the regime’s vulnerability to White House whims.

Watkins says Saudi Arabia’s threatened response to a NOPEC bill would be for all OPEC countries to destroy the U.S. shale industry by turning on the taps, letting oil supply dramatically exceed demand, and driving down prices. “Presumably once they had stopped laughing in the White House, the reaction would have been fairly sanguine, based on the previous attempt by the Saudis and OPEC to do exactly the same thing in exactly the same way from 2014 to 2016,” he writes. The net result for OPEC nations was lost oil revenues of at least $450 billion over two years, according to an International Energy Agency estimate, that has left countries like Saudi Arabia in no condition for another round of economic warfare.

Things are so bad, Watkins says, that the kingdom’s need for an oil price in the range of $84 to $85 per barrel “appears almost existential in nature,” at a time when yesterday’s price was in the $65 range. That gap has Watkins quoting an October 2016 comment from Saudi deputy economic minister Mohamed Al Tuwaijri: “If we don’t take any reform measures, and if the global economy stays the same, then we’re doomed to bankruptcy in three to four years.”

If that newfound vulnerability did free up U.S. legislators to pass the NOPEC bill, Watkins says the value of Saudi Aramco could evaporate as a result.







in Carbon Pricing, Community Climate Finance, Middle East, Oil & Gas, United States

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by Aaron Cosbey
October 4, 2026

…

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Analyst Says Saudi Aramco Shares Could Hit $0 in 2020

December 18, 2019
Reading time: 4 minutes

YouTube

YouTube

While Saudi Aramco is riding high right now with a US$2-trillion valuation after its recent initial public offering, a veteran oil and gas analyst and financial journalist says the stocks could lose all their value in the next year, driven to zero by Donald Trump’s impulsiveness and OPEC’s waning control over global oil markets.

“Within the coming year Aramco shares could well be valued at US$0,” Simon Watkins writes for Oilprice.com. And not because of the multitude of failings investors were arm-twisted into ignoring when Saudi Arabia finally issued the IPO—three years late, at about one-third of its originally intended value, and with no foreign listings.

“The reason for this is not connected to the fact that Aramco does not actually own any of the sites from which it extracts oil and gas—not a single field, not a single well,” Watkins writes. “It is not connected to the fact that it is used as a conduit to fund the latest harebrained social or vanity projects that are nothing to do with its core business—including developing a $5-billion ship repair [complex] and creating the King Abdullah University of Science and Technology. And nor is it connected to the mathematically impossible assertion by the Saudis that their oil reserves have remained at basically the same level for the last 30 or more years despite Saudi pumping an average of nearly three billion barrels of oil every year from 1973 to the end of 2017—totalling 132 billion barrels—with no new significant oil finds being made during that period.”

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View our latest digests

It’s not related to the multiple class action suits the desert kingdom still faces for the 15 of 19 9/11 hijackers who were Saudi nationals, nor the CIA’s conclusion that Crown Prince Mohammad bin Salman personally ordered the brutal dismemberment and murder of journalist Jamal Khashoggi, though those small details “were key reasons why no listing for Aramco took place in the U.S., and indeed the UK.”

The “killer blow”, Watkins says, would come from the No Oil Producing and Exporting Cartels (NOPEC) bill currently making its way through the U.S. Congress, which would make it illegal to artificially cap oil and gas production or fix prices. That kind of activity was the very reason producers formed the Organization of the Petroleum Exporting Countries (OPEC) in 1960. If the U.S., and eventually the UK, adopt anti-trust measures, Aramco could either be accused of “collusive price-fixing”, or abide by rules that would require the country to give up its leadership of OPEC.

Legal sources in Washington, DC told Oilprice.com the bill would open Saudi assets worth about $1 trillion to seizure, and “would also mean that trading in Aramco’s products—including oil and gas—would be subject to the anti-trust legislation, meaning the prohibition of sales in U.S. dollars (oil, of course, is priced in U,S, dollars),” Watkins writes. It “would also mean the eventual break-up of Aramco into much smaller constituent companies that are not capable of influencing the oil price, if the Saudis could offer up no other way of complying with the anti-trust laws.”

Similar legislation has been on the books but never passed in the U.S. since at least 2007. But after years of defending bin Salman, Trump has apparently changed his tune in the last few months. Watkins says the former reality TV star and failed real estate magnate was displeased when Saudi Arabia joined with Russia to drive up global oil prices earlier this year, then miffed again when his Russian sponsor and mentor Vladimir Putin received the trappings of a full state visit on a trip to Riyadh in October.

Then again, judging by the three-year history of Trump’s avid support for Saudi Arabia detailed by Washington Post foreign analyst Ishaan Tharoor, Watkins may be overestimating the regime’s vulnerability to White House whims.

Watkins says Saudi Arabia’s threatened response to a NOPEC bill would be for all OPEC countries to destroy the U.S. shale industry by turning on the taps, letting oil supply dramatically exceed demand, and driving down prices. “Presumably once they had stopped laughing in the White House, the reaction would have been fairly sanguine, based on the previous attempt by the Saudis and OPEC to do exactly the same thing in exactly the same way from 2014 to 2016,” he writes. The net result for OPEC nations was lost oil revenues of at least $450 billion over two years, according to an International Energy Agency estimate, that has left countries like Saudi Arabia in no condition for another round of economic warfare.

Things are so bad, Watkins says, that the kingdom’s need for an oil price in the range of $84 to $85 per barrel “appears almost existential in nature,” at a time when yesterday’s price was in the $65 range. That gap has Watkins quoting an October 2016 comment from Saudi deputy economic minister Mohamed Al Tuwaijri: “If we don’t take any reform measures, and if the global economy stays the same, then we’re doomed to bankruptcy in three to four years.”

If that newfound vulnerability did free up U.S. legislators to pass the NOPEC bill, Watkins says the value of Saudi Aramco could evaporate as a result.







in Carbon Pricing, Community Climate Finance, Middle East, Oil & Gas, United States

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