May 31, 2024 - Energy & Environment

Saudi Aramco's $12B stock move reveals kingdom's economic plans — and struggles

Illustrated collage of triangle shapes and a stack of mixed riyal and dollar bills.

Illustration: Aïda Amer/Axios

Saudi Aramco's plan to sell more shares in the state oil giant is a window into the kingdom's wider economic plans — and struggles.

The big picture: Aramco — which sort of went public in 2019 but remains state-controlled — on Thursday announced what could be a $12 billion offering on Sunday.

Why it matters: The latest stock floatation can't be untethered from the kingdom's struggling economic diversification plans, Rice University's Jim Krane, a Middle East energy analyst, tells Axios.

Between the lines: "The Saudis have had a tough time persuading foreign investors to back their Vision 2030 gigaprojects," he said via email.

  • "Despite numerous flashy project launches, non-Saudis are skeptical that these projects will be built as advertised and earn profits," he added, citing scaled-back plans for NEOM, a futuristic, high-tech industrial city.
  • Krane says this need to self-fund these projects helps explain their hawkish stance on oil prices.

What we're watching: How much the stock sale brings in to the company that pays significant dividends — $98B last year — but faces an unpredictable market too.

  • "The deal will test global investors' appetite for the world's biggest oil exporter amid questions about climate change and the future of fossil fuels," Bloomberg reports.
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