Written by: Jeff Johnson
Big Oil, Banks & Wall Street are not always as they appear…..
Saudi Aramco first announced the possibility of going public earlier this year when oil prices were plummeting. As a guest on Fox Business News’ Varney & Company, last February I was asked my thoughts. I said then that it made no sense for Saudi Aramco to announce an IPO at $30 oil and that “It ain’t happening now.” Who drives down oil prices just to sell in to a depressed market? NOBODY!
In my opinion, the timing was simply to put markets on notice so that a later announcement (today) would not come as a surprise. The question that needs to be asked is “What is magical about 2018?” My bet is Saudi Aramco believes oil supplies will continue to plummet due the lack of investment which in turn will drive oil prices north of $100. The ace in the hole is this: if Saudi Aramco is wrong and oil production flattens, they can cut their own production, drive prices up and sell in to a strong oil price environment. The King gets to set his own ransom… And here we go again with another market cycle. For those who own oil production, there could be a selling opportunity not too far out on the horizon.