December 14, 2019
• SPA releases article/Press release, announcing the Aramco IPO as the largest in history:
“Riyadh, December 11, 2019, SPA — Saudi Arabian Oil Company (Saudi Aramco) was officially listed today in the Saudi Stock Exchange (Tadawul), after the successful completion of the initial public offering of its shares. Saudi Aramco shares opened at 32 riyals.”
• The press release spreads around the world and the initial announcement has immediate effects for the global financial system and world markets.
• The effect is a rise in global oil prices and a rise in prices for energy related equity, particularly in the Kingdom of Saudi Arabia and the Gulf region.
• Positive public engagement and business optimism prevails in the immediate days following the issuance of the SPA article with most business analysts citing the net positive effects for the Saudi economy and for the future of Aramco and its role in the diversification of the Saudi economy (implementation of Vision 2030)
The CrisiReco24 process was right after the Press Release dissemination. The Sensika system was set to collect relevant information from all over the globe. Within the first hour post trigger, the analysis team had enough data to start the second stage – the News Triage.
Issues I & II Classification
Next, the team derived the first issues from the news stories. They were classified based on their impact and time (reputation, cost etc.). Prioritization is given to issues that can become a crisis. Those are addressed with highest priority.
Issues I Assessment
• With the Aramco IPO in the rear-view mirror of history and a new year punctuated by geopolitical crises, the fundamentals regarding the price of oil are erratic with threats of war causing spikes in the overall price of oil futures.
• Ongoing global economic challenges include slow growth in region’s where Saudi and GCC oil demand is the highest. The impact has resulted in a high degree of oil price fluctuation with an emphasis on an overall drop in the price of oil. Because of slowing economic demand and the integration of geopolitical risk into existing pricing, the trend is for an ongoing weakening of the price of oil.
• This means the value of Aramco stock is likely to continue to de-value in the short and medium term translating into a fall in the valuation of Aramco as a corporation.
• With a slow slide in the price of Aramco stock and its overall valuation, there could be an increase in public perception that Aramco stock prices will require KSA government intervention to “prop up” its value.
• While global public perception of the Aramco IPO, and its subsequent valuation as a company, is largely apathetic, a challenge could arise should KSA and Aramco leadership pursue an aggressive narrative and advocacy strategy of company resilience, company success, and “everything is fine” messages. The public won’t believe it.
Issues II Assessment
The team conducted an assessment of news stories, also preceding the Aramco IPO, to evaluate their further potential of developing into crises.