Outrun Change

We need to learn quickly to keep up with the massive change around us so we don't get run over. We need to outrun change.

More news from the Middle East that could affect the oil market and prices

Here are a few articles that caught my interest. Two on Aramco possibly floating an IPO and two on increasing tensions between Saudi Arabia and Iran.

1/7 – The Economist – Saudi Arabia is considering an IPO of Aramco, probably the world’s most valuable company In an interview the day after Saudi Arabia broke diplomatic relations with Iran, deputy Crown Prince Mohammed bin Salman, made several headlines. First, he “denied” there is chance a war with Iran. Indicated it would be a major catastrophe and that Saudi Arabia wouldn’t allow such a war to start.

Second, the Deputy Crown Prince indicated the government is exploring the idea of selling a small portion of Saudi Aramco. That is the company that owns all of the Saudi oil and owns all the downstream operations. Possibilities in the air are sign perhaps 5% of the holding company or several of the downstream operations.

Reserves of Saudi Aramco as cited in the article at 261B barrels, which is 10 times the reserves of ExxonMobil.

Intriguing consequence of any such IPO would be the massive increase in publicly available information since an IPO would have to disclose much more than is currently known.

1/9 – Wall Street Journal – Could Saudi Aramco Be Worth 20 Times Exxon? – Absolutely wild guesses speculate that any offering of stock from Aramco could infer a total value as high as $10 trillion. That would be 10 times Apple’s capitalization at its peak. For comparison, ExxonMobil has market value of around $317B, or $0.3T.

Speculation is any offering would be of downstream companies, not the parent. Offering stock in the parent would require disclosure of a huge amount of information, which information the article say the Saudi government considers to be state secrets.

1/7 – Wall Street Journal – Iran Accuses Saudi Arabia of Bombing Its Embassy in Yemen – Iran reports its Embassy in the capital of Yemen received damage from a Saudi airstrike. Article says unverified reports say there was a bomb that went off 700 m from the embassy. Shrapnel hit the embassy and broke windows.

Ummm. That was not an attack on the embassy. One of the buildings would be leveled if that was the case. Not some broken windows.

1/9 – Wall Street Journal – Saudi Arabia Steps Up War of Words With Iran – Saudi Arabia announced over the weekend they may have to take additional steps if Iran does starting acting like a nation state. Instead Iran is acting like a revolution.

This is not good. I have no idea what “acting like a nation state” means in the diplomatic world, but it doesn’t sound good.

The Saudi government made a joint announcement after an emergency meeting with UAE, Qatar, Kuwait, Bahrain, and Oman.

Bruce Oksol says such a meetings used to be called “war games.” Not good.

Memo to drillers in North Dakota: Keep track of where you parked those rigs. You might need them on short notice. Also, might be a good idea to keep in touch with all those roughnecks that moved back home.

1/9 – Gallagher at The American Interest – The Roots of Saudi Rage – Article covers a number of reasons the Saudis are upset. Iran is funding & supporting proxy wars in Syria, Yemen, and Iraq. There is extensive fighting inside the kingdom’s Eastern Province, which is home to most of the Shiites. Saudis also perceive Iran is funding domestic turmoil in Saudi Arabia and other countries. Cited article has the Saudis wondering if the slow American tilt towards Iran and away from Saudi Arabia is intentional or accidental.

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