Despite the lukewarm response of international investors to Saudi Arabia’s initial public offering of Aramco, the Arabian government will float 1.5 per cent of the oil company’s total shares to the investors. Even that small fraction of its will value the company at between $1.6tn-$1.7tn. The lukewarm response of international investors means that the IPO will instead rely on demand from domestic retail investors, regional investors and other sovereign funds. The IPO will undoubtedly help the Saudi government in diversifying its economy. Nevertheless, the move will also alter the geopolitical realities in the region as well.

The changes in the geopolitics, which will come with the move, have already manifested themselves. The Saudi officials have visited China and Russia in recent weeks in a bid to highlight the demand from countries that have been interested in strengthening relations with Riyadh. Notably, China will not let go of this opportunity that has the potential of minimising the American influence in the region. Likewise, Russia, sharing the Chinese considerations, can and will also come forward to exploit the moment.

True that the dull international investors’ response is a setback for the monarchy. However, the decision of allowing non-government shareholders for the first time in nearly four decades will empower the oil-rich country to influence other countries’ foreign policy in the region.

While selling the shares to the investors will change Saudi Arabia’s foreign policy, the country’s oil policy will also change as more stock is sold to the outside investors. The company will find itself under higher pressure to operate differently. Naturally, investors will want the company to maximise short-term profits. Hence, Aramco’s present aims of expanding lower-margin businesses may be sidelined in favour of tapping easy to reach domestic oil reserves and pushing up production capacity. What is evident is that the Aramco’s IPO will have far-reaching consequences on Saudi Arabia’s oil and foreign policies.