WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns

Brent crude and WTI prices rose to $65.20 and $57.43 per barrel respectively as oil traders were distracted from worries over supply to concerns about security in the Middle East region. (AP)
Updated 23 June 2019

WEEKLY ENERGY RECAP: Oil trading is reflecting regional security concerns

  • Up until this week, Brent had been on a downward trajectory
  • As we move into the last week of June, Iranian oil exports remain at historic lows

RIYADH: It has taken a while but the oil market has finally responded to tensions in the Arabian Gulf. Brent crude and WTI prices rose to $65.20 and $57.43 per barrel respectively as oil traders were distracted from worries over supply to concerns about security.
Up until this week, Brent had been on a downward trajectory with the price unable to break out of the low $60’s since the end of May as the market focused on weaker demand projections, in part linked to escalating trade tensions and the fallout from the US-China trade war.
With the market now focused not only on the threat of military escalation in the Strait of Hormuz but also falling US crude oil and gasoline stockpiles, the bulls are once again on the rampage.
As we move into the last week of June, Iranian oil exports remain at historic lows as Tehran is shunned by global refiners. We are also seeing the resumption of stronger buying appetite as Asian refiners try to secure oil cargoes before the end of the month, after having waited so long to do so in the hope that prices would keep falling after persistent oil short-selling surges amid concerns of slowing oil demand.
Part of the downward movement in oil prices last month was attribute to weak refining margins for Naphtha. However, if oil prices continue to rise, this might end the weakest Naphtha refining margins in years.
Naphtha margins have been negative since early 2018 with Asia awash with light distillate amid plentiful supplies.
The ample supplies of light sweet crude which comes mainly from US shale also contributed to this bearishness as Asian refiners can’t absorb as much of this type of oil as the sour medium to heavy grades from the Arabian Gulf.
The light sweet crude grades are a shorthand for oil that has less than 0.5 percent sulfur content. These light sweet crude grades yield more naphtha and gasoline than medium and heavy sour alternatives.


Global trade experts gather in Riyadh as virus crisis heats up

Updated 24 February 2020

Global trade experts gather in Riyadh as virus crisis heats up

  • More than 1,000 international companies set up operations in Saudi Arabia last year

RIYADH: World trade experts are gathering in Riyadh for a major conference as the coronavirus crisis casts a shadow over global commerce.

The Asia House Trade Dialogue takes place on Tuesday in the Saudi Arabian capital, with thought leaders and policymakers taking part in the first such event to be staged in the Kingdom. Around 200 delegates are expected to attend the one-day forum.

Leading thinkers will share their insights on global trade, women’s growing role in business, and the energy industry moving toward renewable technologies. There will also be a live link with a Beijing-based expert on Chinese business to discuss the economic effects of the virus.

Asia House is a London-based consultancy which is headed by the former British trade minister and chairman of the HSBC banking group, Lord Green of Hurstpierpoint. He said: “With Saudi Arabia hosting the G20 this year, we believe it is an important time to bring our trade dialogue to Riyadh to explore the economic shifts taking place in the region and beyond.”

The event is sponsored by the Saudi British Bank, whose chair Lubna Olayan will deliver the keynote speech.

She said: “Trade has historically always been important to the development of the Kingdom, and that is equally true today as the Far East and the Middle East are once again becoming increasingly connected, and we begin a year in which Saudi Arabia leads the G20, with deliberations around trade and investment being a major focus of the B20 (the business arm of G20 summit of world leaders). It is truly an exciting time, so we are pleased to be jointly hosting this important event to explore opportunities for enhancing and facilitating growing trade links between the Far East and the Middle East.”

The conference will be opened by Ibrahim Al-Omar, the governor of the Saudi Arabian General Investment Authority, the body which promotes foreign investment in the Kingdom. Arab News is the strategic media partner for the event.

Lord Green said: “The Middle East remains an extremely important region for global trade, especially as the Gulf broadens its relationships with Asian markets. Just last year, more than 1,000 international companies set up new operations in Saudi Arabia, highlighting business interest in the Kingdom.”

Victor Gao, who is vice president of the Beijing-based Center for China and Globalization, will answer questions via web link about the impact of coronavirus on the Chinese economy.

Saudi Arabia launched its G20 presidency last December with a declaration of its program, which seeks to support innovation, achieve prosperity, empower people and preserve the planet, in line with the Kingdom’s Vision 2030 reform plan.

King Salman hailed the G20 presidency as proof of the country’s key role in the global economy.