Aramco.. From the top of ambition to edge of collapse

The Saudi regime relied on opening the door for foreign investment in the shares of Aramco National Oil Company in 2020 to revive its treasury in record amounts and reduce the crisis of the Kingdom’s economy which faced an unprecedented crisis.

But the kingdom’s oil industry has been hit by successive attacks, as in the past weeks and months, that could make foreign investors distract from these stocks.

This marks Aramco’s descent from ambition and hope for economic success to the threat of a global meltdown as never before.

In another negative sign, Fitch Ratings announced that Saudi oil giant Aramco was downgraded by one notch to “A”, days after its downgrade of the kingdom, and kept its outlook stable.

The downgrade comes after last month’s attacks on two production facilities belonging to the national oil giant Aramco, which led to a short cut of more than half of the company’s oil production.

Fitch said in a statement that the downgrade took into account the growing geopolitical tensions in the region, and the continued budget deficit in the country.

Fitch estimated that the attack on Aramco’s facilities would have a very limited impact on Saudi Aramco’s operating and financial performance in 2019, and the agency believes the company has proven to be able to deal effectively with emergencies.

At the end of September, Fitch downgraded the Kingdom from A + to A with a stable outlook.

The Saudi Ministry of Finance then questioned Fitch’s announcement of a downgrade of the kingdom’s credit rating, noting that what the IAEA report contained at the time did not reflect the implications of the kingdom’s quick response to the Aramco attacks.

The Ministry expressed reservations about the Agency’s decision and considered it urgent.

On September 30, Fitch downgraded Saudi Arabia’s credit rating from “A +” to “A” with a stable outlook on the backdrop of the attacks.

The Saudi authorities have repeatedly delayed Aramco’s IPO, and the Wall Street Journal last month revealed that the authorities were considering doubling the stake offered for the Aramco IPO after its oil infrastructure was damaged by the attack on the two facilities.

Riyadh has asked Fitch Ratings to reconsider its downgrade after the attack on two Saudi oil facilities.

Riyadh said it had shown restraint and a careful look at its handling of the September 14 attack, which initially cut Saudi production in half, adding that Saudi oil supplies had been fully restored.

Fitch believes there is a risk of further attacks on the kingdom, which could lead to economic damage.

Recent drone and missile attacks on the kingdom’s oil infrastructure have temporarily suspended more than half of the kingdom’s oil production.