"The risks will remain over the near term as both the United States and Iran aim threats at one another," said Jameel Ahmad, a markets analyst at FXTM in London. The drop in Aramco shares "is a natural reaction to the co-ordinated risk aversion that has swept global sentiment since the events at the end of last week", he said.

The missile attack killed Iran's head of the elite Quds Force of the Islamic Revolutionary Guard Corps who had long been seen by Israel and the US as one of the most dangerous and potent figures in the region.

His killing, ordered by US President Donald Trump, was a reminder of the risks of investing in the region.

In September, Saudi Arabia's oil production was cut by half after a swarm of explosive drones struck some of its most important production facilities. The US and Saudi Arabia blamed Iran for the attack, while Yemen's Houthi rebels claimed responsibility.

Aramco was back pumping 9.9 million barrels a day just one month after the attacks and the company pressed ahead with what was to be the world's biggest IPO.

At the time of the sale, many foreign investors cited geopolitical risk as reasons to stay away from the shares, and considered them too expensive. Even after this week's fall, Aramco has a valuation of $US1.8 trillion, easily the highest among listed companies.

Aramco still has some built-in protection because the shares are mostly in the hands of those used to regional politics, mitigating selling pressure at times of tension. Saudi government institutions invested almost $US2.3 billion in the IPO. The government also relied heavily on ordinary Saudis and funds from neighboring Gulf Arab monarchies to ensure the success of the offering.

On top of that, Goldman Sachs is acting as share-stabilising manager for the offering until the end of this week and can buy shares as part of that. It also has the right to exercise a so-called greenshoe option of 450 million shares, which would normally be used if the stock was rising too fast. No price-stabilisation transactions had been executed as of December 31, according to a statement from Aramco.

"Very few active managers are in the stock and most shareholders are either government-related entities, quasi-passive or passive," said Marwan Haddad, senior portfolio manager at Emirates NBD Asset Management in Dubai.

"Therefore volatility would be low unless an actual attack takes place, which we believe has a low probability. Moreover, as the oil price goes up, downside risk falls."