Saudi Arabia output cuts seen to support oil rebound

US President Donald Trump took credit for driving down oil prices. (Reuters file photo)
Updated 10 January 2019
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Saudi Arabia output cuts seen to support oil rebound

  • OPEC led by Saudi Arabia, alongside other producers led by Russia, agreed last year to rein in supplies

 

LONDON: Oil prices rebounded on Thursday after an early slide, helped by dollar weakness and signs of output cuts by the world's top crude exporter Saudi Arabia that eased concerns about a glut.
International Brent crude futures were up 94 cents at $55.85 a barrel by 13.40 GMT. US West Texas Intermediate oil futures rose 65 cents to $47.19 a barrel.
"The feeling is that OPEC is delivering on cuts," SEB head of commodities Bjarne Schieldrop said, citing a Bloomberg survey showing Saudi Arabia had cut production significantly.
The dollar added support as it slipped against a basket of currencies, making dollar-denominated oil cheaper for holders of other currencies.
OPEC led by Saudi Arabia, alongside other producers led by Russia, agreed last year to rein in supplies starting from January after oil tumbled from above $86 on worries about surging output.
In physical oil markets, Riyadh is expected to cut February prices for heavier crude grades sold to Asia by up to 50 cents a barrel due to weaker fuel oil margins, respondents to a Reuters survey said on Thursday.
US President Donald Trump took credit for driving down oil prices, saying the drop amounted to a tax cut for Americans.
Thursday's swing in the oil price, which fell as much as 2 percent in earlier trade, mirrored volatility in other markets after tech giant Apple cut its sales forecast, citing a slowdown in China. This has added to concerns about a slowing global economy, which weighs on prospects for oil demand.
"This is a continuation of the volatility afflicting commodities and oil, with the last 24 hours marked by the release of various weak economic data points, particularly manufacturing PMIs, for major economies," consultancy JBC Energy said.
More broadly, oil markets have been sliding with rising production from top producers, the US and Russia.
Supply from Iraq, OPEC’s second-biggest producer, has also climbed, with December exports at 3.73 million barrels per day (bpd) versus 3.37 million bpd in November.


Time to tear down Mideast trade barriers, Davos panel hears

Updated 23 January 2019
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Time to tear down Mideast trade barriers, Davos panel hears

  • Mohammad Al-Tuwaijri, Saudi minister of economy and planning, said a move to ease movement of traffic across the border could be followed elsewhere
  • Majid Al Futtaim CEO Alain Bejjani: Now there’s this seriousness between Saudi Arabia and the UAE, I hope it gets to frictionless trade

DAVOS: Amid global trade wars and the rise of protectionism, Middle East economic and business leaders on Tuesday issued a clarion call for the exact opposite: To ease customs restrictions in the region.
A panel at Davos heard how an agreement between Saudi Arabia and the UAE to boost cooperation — including the reduction of obstacles to trade across the shared border — could be a blueprint for the wider region.
Mohammad Al-Tuwaijri, Saudi minister of economy and planning, said a move to ease movement of traffic across the border — partly through the use of technology — could be followed elsewhere. “We want to establish a reference for others to follow,” he said.
Alain Bejjani, CEO of retail and leisure group Majid Al Futtaim, said “frictionless trade” would give the region a boost.
“Now there’s this seriousness between Saudi Arabia and the UAE, I hope it gets to frictionless trade,” he told Arab News on the sidelines of the Davos forum.
Bejjani declined to say whether that would involve a customs union, a common market or a common currency. Given the imposition of trade tariffs between the US and China, and the rise of Brexit, globalization — something espoused by many Davos delegates — is seen as on the wane.
But Bejjani said breaking down barriers in the Middle East could help it better compete with Western Europe and the US.
“For the past almost century now… we’ve been ingeniously working on making sure we put barriers across the Arab world. The reality is we have a market that’s as big as most of the largest markets in the world… if we’re smart enough to work together,” he told the Davos panel.
Khalid Al-Rumaihi, chief executive of the Bahrain Economic Development Board, agreed that Saudi-UAE cooperation was “a great template” for others to follow.
Aside from “opening up” Middle East markets, Al-Rumaihi said harmonizing regulation in the region would also be beneficial to businesses and entrepreneurs.
“If the rules are changing in each country, if they’re not harmonized, it’s very difficult… for an entrepreneur (to understand) the regulatory environment. So they don’t scale very quickly, and that’s something we need to solve,” he said. Talk of freer trade within the Middle East is especially relevant when it comes to the Palestinian territories, which are subject to Israeli occupation and blockade.
Palestinian Prime Minister Rami Hamdallah said freer movement and a reduction of duties would help the economy grow.
“We need to see our products being waived (of) customs,” he said. “We need mobility — we’re under occupation.”