WEEKLY ENERGY RECAP: China highlights demand strength

Oil has been under pressure from concerns over global economic growth amid ongoing US-China trade tensions. (Reuters)
Updated 03 August 2019

WEEKLY ENERGY RECAP: China highlights demand strength

  • Upcoming September crude oil trading was completed without a single unsold Gulf crude cargo

An eventful week ended with downward momentum for oil prices. Brent crude fell to $61.89 and WTI dropped to $55.66 per barrel.

Oil has been under pressure from concerns over global economic growth amid ongoing US-China trade tensions.

However, crude remains healthy, reflected by growing demand from refineries in Asia, where new refining capacity is coming online. 

Exports from the Arabian Gulf to Asian refiners are growing — a key barometer for the overall health of the global crude market.

Though crude oil trading activity in the Gulf region have been threatened amid political turmoil in the Strait of Hormuz, there has been no change in Asian refiner plans from the area.

Upcoming September crude oil trading was completed without a single unsold single cargo for sour crude from the Arabian Gulf.

Gulf sour crude grades have further strengthened on bullish fuel demand amid tighter supply for high sulfur fuel oil and bunker fuels. That has resulted in medium sour crude spreads pushing upwards.

The strength of underlying demand in the market was highlighted by China’s record crude oil imports from Saudi Arabia in July.

OPEC crude oil production fell to an 8-year low, just 29.42 million barrels-per-day (bpd) in July, down 280,000 bpd from June. Voluntary output cuts from Saudi Arabia and steep losses from Iran contributed to this historically low figure.

Libyan crude oil production fell below 1 million bpd to just 950,000  after the Sharara oil field, the largest in the country, went offline for the second time in as many weeks.

There was a huge decline in US crude oil stockpiles for the seventh week in a row. The EIA reported that US crude inventories declined by nearly 49 million barrels in the last seven weeks. It is the longest retreat since the winter of 2017/18 when they fell for a record 10 consecutive weeks. 

Stockpiles of gasoline and distillate fuels also shrank, which should ease concerns about slowing consumption, as strong summer demand in the US continued to drain stockpiles. The EIA report showed total US inventories were at their lowest level since late May.

Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

Updated 17 January 2020

Indonesia hails ‘historic’ $22.9bn mega-investment deal with UAE

  • Leaders agree initial $6.8bn projects plan, including initiative to build a replica of Abu Dhabi grand mosque in Java

JAKARTA: Indonesia’s business community on Thursday welcomed the UAE’s pledge to pump tens of billions of dollars into a wide range of key sector projects.

President Joko Widodo and his entourage secured an overall $22.9 billion deal during an official two-day visit to Abu Dhabi earlier this week covering the fields of energy, logistics, port construction, mining, and agriculture.

It was also revealed that the delegation brokered a UAE commitment to assist in establishing an Indonesian sovereign wealth fund.

At a bilateral meeting, the Indonesian leader and the Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al-Nahyan witnessed the signing of 11 business accords between the two countries. Indonesia’s Minister for Foreign Affairs Retno Marsudi said the UAE had committed to investing $6.8 billion out of the total agreed spending package into the initiatives.

Luhut Pandjaitan, Indonesia’s chief minister for maritime affairs and investment, described the UAE’s pledges as possibly being “the biggest deals in Indonesia’s history, secured with the UAE within only six months,” referring to the crown prince’s visit to Indonesia last July.

While most lauded the deal, some Indonesian business leaders remained cautious over the long-term prospects for the projects.

Fachry Thaib, head of the Middle East Committee and OIC at the Indonesian Chamber of Commerce, said the schemes could trigger a wide-ranging domino effect through job creation and other business ventures.

“The government needs to have a strong lobbying team that can follow up these deals and push them into investment realizations. We have had such commitments from other Gulf countries, but there was no further lobbying and the pledges were hardly realized,” he told Arab News.

Zaini Alawi, a businessman who exports and imports between Indonesia and the Middle East, said: “It would set a good precedent to attract other Gulf countries to invest here if Indonesia shows it could aptly manage these investment deals.”

Director for Middle East affairs at Indonesia’s Foreign Ministry, Achmad Rizal Purnama, told Arab News that the $6.8 billion commitment from the UAE was only the first phase of a long-term program.

Widodo and the crown prince also witnessed the signing of five government cooperation agreements in health, agriculture, Islamic affairs, and counterterrorism.

Indonesian Minister of Religious Affairs Fachrul Razi said one of the main aspects of the cooperation agreement would be the promotion of religious moderation and raising awareness of the dangers of extremism.


The UAE has pledged to assist in establishing an Indonesian sovereign wealth fund.

Noting that the UAE had pledged to fund the construction of a replica of the Abu Dhabi grand mosque in Solo, the president’s hometown in Java, the minister pointed out that the grant was part of a commitment by the two countries to establish a mosque that welcomed all people and served a pivotal role in promoting the middle path of Islam.

Riza Widyarsa, a Middle East expert at the University of Indonesia, told Arab News that the cooperation deal could help more Indonesians to understand that not all countries in the Middle East observed conservative Islam. “They are also very active in countering religious extremism and radicalism,” he said.

In addition to the multi-billion-dollar projects, Purnama said Indonesia had also secured the UAE’s commitment to assist in establishing an Indonesian sovereign wealth fund into which the UAE, the US International Development Finance Corporation, and Japan’s SoftBank would inject funding.

And according to Pandjaitan, the UAE had pledged to be “the biggest contributor” to the fund.

The fund would be used to finance Indonesia’s ambitious infrastructure development projects and the construction of its proposed new capital in East Kalimantan, a relocation that has been estimated to cost $33 billion and of which Indonesia could only afford 19 percent.

He said all parties involved would meet in Tokyo soon to set up the structure of the fund and to finalize the plan, which the government expected to launch by mid-2020, a year after the crown prince proposed the idea to Widodo.

“This could be the first time that big capitalists work together in a single project,” Pandjaitan added.