Saudi Aramco shares posted solid gains on their first day of trading in Riyadh, boosted the value of the world's biggest oil company -- and history's biggest IPO -- closer to the government's $2 trillion target.
Aramco raised around $25.6 billion from its November IPO that valued the state-backed oil giant at $1.77 trillion. Domestic and regional investors bought most of the shares on offer, however, as international funds balked at the tiny 1.5% float and tight trading restrictions on the Tadawul, the Saudi stock exchange.
Aramco shares jumped 10% in the opening minutes of trading -- the maximum allowed under Tadawul rules -- to change hands at around $9.39 each.
The Aramco listing also follows last week's decision by the OPEC cartel -- at Saudi Arabia's behest -- to deepen its agreed production cut agreement by 500,000 barrels per day, to a total of 1.7 million, in order to address was it calls a global market imbalance.
The pact, which was first agreed in December of 2017, is now seen by many analysts as an attempt by Saudi Arabia to keep global oil prices firmly over the $60 per barrel.
Global oil prices, however, traded lower for a second consecutive session Wednesday as traders reacted to yesterday's reading of U.S. crude supplies from the American Petroleum Institute, which indicated a surprise 1.4 million barrel buildup in domestic stockpiles.
The Energy Department also predicted Tuesday that the U.S. will be a next exporter of crude as early as 2020, as production from shale deposits continues to surge and overall output tops 13 million barrels per day, adding further downward pressure to global crude prices.
Aramco's commitment to paying dividends in the region of $75 billion a year, from a net income base of around $110 million, suggests oil prices will need to remain at or above $60 a barrel in order for the longer-term ambition of drawing investors to the group -- and the broader Saudi economy -- to be successful.