SAUDI ARABIA is placing its biggest state asset – the Aramco oil company – on the stock market in a bid to raise funds to transform its economy, but its value has been slashed since Iran unleashed an explosive attack on two of its plants as the two nations squabble for influence in the Middle East.
Crown Prince Mohammad Bin Salman will look to sell the Kingdom’s largest asset at its valuation of approximately £1.1trillion. This represents a significant decrease in value, as Aramco had previously been estimated at a value of over £1.5trillion in the first half of this year, as reported by International Business Times in April. With around a quarter of the price knocked off the value of the colossal oil giant, It appears Iran’s Saudi oil attack has left a serious dent in Riyadh’s economy.
On September 14, two explosive drone strikes were launched and decimated two Aramco oil plants in Saudi Arabia – one in Abqaiq and one in Khurais.
The strikes immediately halved Saudi oil output and also provoked a momentary but major spike in prices on the world’s markets.
Iran-backed Houthi Rebels in Yemen claimed responsibility for the attacks, with Iranian President Hassan Rouhani denying any involvement as suspicion over Tehran grew.
Despite Rouhani’s defiance, many Western countries, including the US, UK and France roundly accepted that Iran were in fact the perpetrators, sparking weeks of political and diplomatic disputes that still rage on now.
Just two weeks ago, Saudi Minister of State for Foreign Affairs Adel Al-Jubeir said Riyadh is convinced that Iran were the orchestrators behind the Saudi oil attack.
Speaking in London, Al-Jubeir was discussing Saudi Arabia’s foreign policy when he said the EU was right to blame Iran for the attacks and added “Iran does not respect the sovereignty of states and does not respect international law”.
Riyadh’s anger is likely due to the huge impact this will have on their future economic plans.
Saudi Arabia is reportedly planning to use any money recouped from the sale of Aramco to drastically modify its economy in an effort to become more appealing to foreign investors, with many still concerned over Saudi Arabia’s dire human rights record.
Iran and Saud Arabia have been long standing rivals for influence in the Middle East, but seemed to be closer to talks after Pakistan Prime Minister Imran Khan visited both Tehran and Riyadh last month.
Rouhani reiterated an Iranian desire to resolve issues in the region through dialogue, despite a flare-up of violence. Both governments blame each other for the attacks.
Talks have stalled though, with al-Jubeir stating last month: “We think that appeasement doesn’t work. Actions count, not words.
“Members of the Iranian government talk, but have no power. Those who have, like the Revolutionary Guard, don’t want to negotiate.”
Iran may have left a significant hole in Saudi Arabia’s economic ambitions, but Aramco’s financial dominance means the public offering will still be the largest in history, and the company will still be 50 percent larger than the next biggest firm on the market.
With the US major partners for Riyadh, the company supplies 13 percent of the world’s oil and made a monstrous £35billion profit at the halfway point of this year.
Saudi Arabia will persist in their quest for dominance in the Middle East and recognition on the world stage as Iran continues to find ways to scupper the Kingdom’s progress.