Saudi Arabia: Shia Political Unrest and Oil
Bonds’ Risk
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| Ref. No. 13-53-21. Ian Britton. FreeFoto.com |
Saudi Arabia’s state-owned
oil company Aramco may lead Gulf in bond sales in the second and third quarters
of 2012[1].
Their two biggest oil fields (Shaybah and Ghawar) are situated in the eastern
region of the Peninsula, where Shia-minority-based political unrest would
potentially erupt. Specific attacks on refineries and oilfields, or a general
uprising in the region against the Al-Saud rule, are among possible events and
they would create political risk impacting on expectations on Aramco’s bonds’
value.
Our CALL is that this is not a real risk because Riyadh and its
security apparatus have the ability to crash any attempt of revolt.
Furthermore, any noise -potentially
wrongly interpreted by the market as a bad signal-
will create opportunities in terms of dropping prices of those highly valuable
bonds.
