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Saudi Arabia will use part of the money raised through Aramco’s initial public offering to strengthen its defense capabilities, Saudi Finance Minister Mohammed al-Jadaan told Reuters in an interview at the World Economic Forum in Davos.
The minister told Reuters the Kingdom was making an effort to defuse the tension between the United States and Iran, which spiked after the U.S. assassination of a top Iranian general, and led to a retaliation against military bases housing U.S. troops in Iraq.
“If you look at history, we in this region have managed to weather through worse geopolitical situations, including actual, real wars,” Al-Jadaan said, adding “We work with our military industry to develop our own military assets in the mid-term to deal with these risks, including investment by PIF,”
“We in Saudi have to focus on the economy and reform ... We firmly believe the disputes can only be resolved by dialogue,” the minister added.
Dialogue, it seems, is not always enough, however. Last year, a Saudi oil field and a processing plant became the target of missile and drone attacks that the Yemeni Houthi rebels took responsibility for but the U.S. blamed on Iran. Earlier this month, investigators assigned by the UN to find the culprit concluded in a confidential report that the Houthis could not be responsible for the attacks.
The drone and missile attacks caused a fire at the Abqaiq oil processing facility and a production outage at the Khurais field, taking 5.7 million bpd in daily production offline. This caused a temporary spike in oil prices as Aramco struggled to restore production as quickly as possible.
Although higher prices would benefit Saudi Arabia, preventing further attacks would be wiser in view of the longer-term ambitions that Riyadh has for Aramco. The company listed at home in December but, Al-Jadaan told Bloomberg, an international listing is still on the table.
Meanwhile, the proceeds from the local listing would go towards strengthening various industries.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.