Kingdom exports 1.89bn barrels oil worth SR279 billion in 8 months

Updated 30 August 2016
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Kingdom exports 1.89bn barrels oil worth SR279 billion in 8 months

RIYADH: Saudi Arabia exported nearly 1.89 billion barrels of crude oil in the first eight months of the current year with proceeds amounting to SR279 billion, a drop of 27 percent compared to figures of same period last year, local media said quoting an economic expert.
Domestic consumption during the same period was expected to reach 642 million barrels, or 25 percent of the total output, Al-Riyadh daily said quoting Fahad bin Jumaa.
Jumaa said oil prices fluctuated between $40 and $43 per barrel at the beginning of August, where Brent and West Texas oil prices stood at $42.47 and $41.75, respectively, on Aug 10.
However, oil prices sharply rose following statements from Saudi Energy and Mineral Resources Minister Khalid Al-Falih on the possible freeze (stabilization) of oil production by the OPEC officials in their Algiers meeting on Sept. 26-28, he said.
Accordingly, Brent and West Texas oil prices rose by 21 percent and 18 percent to $50.88 and $49.11, respectively, on Aug 19. Later, oil prices registered a marginal drop to $50 for Brent and $47.31 for West Texas, Jumaa added.
He ruled out any stabilization of oil production in all oil producing countries with the exception of Saudi Arabia, adding that a production freeze will not lead to a price rise with the existence of the glut in oil supplies.
The oil expert expects that oil producing countries of high costs will increase their production with improvement in prices and then go back to the previous situation. Therefore, it is better to maximize the market share for the Kingdom and other OPEC members, he said.
OPEC sees the balance of supply and demand for its members in 2016 at 31.9 million barrels per day, with an increase of 1.9 million barrels compared to the previous year. It said demand on OPEC oil is expected to rise to 33 million barrels a day in 2017.
On July 18, the executive board of the International Monetary Fund (IMF) predicted a slow growth rate of fixed gross domestic product (GDP) at 1.2 percent in 2016, but poised to grow to 2 percent in 2017. Therefore, the Kingdom’s budget deficit is expected to drop by 13 percent of the GDP with the increase of non-oil revenues and cutbacks in spending, he added.


Saudi stocks receive landmark emerging markets upgrade from MSCI

Updated 22 min 39 sec ago
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Saudi stocks receive landmark emerging markets upgrade from MSCI

  • Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months
  • MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds

LONDON: Saudi Arabian equites are poised to attract up to $40 billion worth of foreign inflows, following a landmark decision by index provider MSCI’s to include the Kingdom’s stocks in its widely tracked Emerging Markets index.

"MSCI will include the MSCI Saudi Arabia Index in the MSCI Emerging Markets Index, representing on a pro forma basis a weight of approximately 2.6% of the index with 32 securities, following a two-step inclusion process," the MSCI said in a statement late on Wednesday night Riyadh time.

“Saudi Arabia’s inclusion in MSCI’s EM Index is a milestone achievement and will likely bring with it significant levels of foreign investment,” Salah Shamma, head Of investment for MENA at Franklin Templeton Emerging Markets Equity, told Arab News. 

“It is a recognition of the progress Saudi Arabia has made in implementing its ambitious capital markets transformation agenda. The halo effect of such a move will be felt across the stock exchanges of the entire Gulf Cooperation Council (GCC).”

Market authorities in Saudi Arabia have introduced a series of reforms in the past 18 months to bring local capital markets more in line with international norms, including lower restrictions on international investors, and the introduction of short-selling and T+2 settlement cycles.

Such reforms prompted index provider FTSE Russell to upgrade the Kingdom to emerging market status in March, opening the country’s stocks up to billions worth of passive and active inflows from foreign investors.

MSCI’s Emerging Market index is tracked by about $2 trillion in active and global funds. The inclusion of Saudi stocks in the index, alongside FTSE Russell’s upgrade, is forecast to attract as much as $45 billion of foreign inflows from passive and active investors, according to estimates from Egyptian investment bank EFG Hermes. 

The upgrade announcement was widely expected by the region’s investment community, following a similar emerging markets upgrade announcement by fellow index provider FTSE Russell in March. 

“MSCI index inclusion will be a historic milestone for the Saudi market as it will allow for sticky institutional money to make an entry in 2019 which will help deepen the market,” said John Sfakianakis, director of economic research at the Gulf Research Center in Riyadh.