ENERGY RECAP: Iranian crude exports plummet

An Iranian flag flutters on board the Adrian Darya oil tanker, formerly known as Grace 1, off the coast of Gibraltar on August 18, 2019. (AFP)
Updated 25 August 2019

ENERGY RECAP: Iranian crude exports plummet

  • US President Donald Trump and top White House officials dismissed concerns that US economic growth may be faltering, yet we still see a bearish forward view on the market from OPEC and the International Energy Agency

Brent crude edged closer to the $60 (SR2225) barrier over the course of the week, finishing at $59.34 per barrel while WTI deteriorated slightly to $54.17 per barrel. Prices remain relatively stable on a week to week basis and continued to move in a narrow band.
Still, oil futures speculators were broad-based sellers last week as the uncertainty over the outlook for global economic growth and future demand continued to take its toll.
US crude oil inventories declined by 2.7 million barrels and the US rig count also slipped below 1,000 for first time since May 2017.
A second drone attack on a Saudi Arabian oil field within three months brought geopolitical risks back into focus, displacing recession worries and concerns about lower oil demand growth.
Even if concerns about an economic recession continued to weigh on crude prices, the US-China trade dispute has shown that this has not hurt demand as much as feared.
Instead, China has chalked up new record levels of oil imports every month.
US President Donald Trump and top White House officials dismissed concerns that US economic growth may be faltering, yet we still see a bearish forward view on the market from OPEC and the International Energy Agency.
That appears largely driven by the view held by some economists that a trade dispute could lead to a global recession that will lead to a drop in oil demand growth, The US Department of State said that sanctions caused Iranian crude exports to fall to about 100,000 bpd in July, down from roughly 2.5 million bpd a year earlier.
By zeroing out these oil exports, the US is disrupting about $50 billion in annual revenue to the Iranian regime. It is also unclear if these remaining barrels are condensate only, which is a kind of ultra-light crude oil that is produced from natural gas fields.

Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq


Automechanika Riyadh opens, featuring leading global suppliers

Updated 34 min 21 sec ago

Automechanika Riyadh opens, featuring leading global suppliers

  • Saudi auto deals grew 40 percent last year with influx of female buyers

RIYADH: Leading names in the global auto services industry are out in force at Automechanika Riyadh — which opened on Monday at Al Faisaliah Hotel — vying to increase their share of a growing market expected to reach a value of $10.15 billion by 2023.

Automechanika Riyadh is the regional arm of the world’s largest trade fair, congress and event organizer, Messe Frankfurt, which has licensed the Automechanika brand to event organizer Al Harithy Company for Exhibitions (ACE) Group.

Mansour Abdullah Al-Shathri, vice chairman of the Riyadh Chamber of Commerce, inaugurated the trade event, which will run from Feb. 24-26.

It was revealed that Saudi auto deals grew approximately 40 percent last year, with female buyers accounting for between 10-15 percent of sales after the landmark decision to allow women to drive in the Kingdom for the first time.  

“International suppliers are stepping up their marketing for the resurgence in Saudi’s market, and this impacts the entire supply chain,” said Mahmut Gazi Bilikozen, show director for Automechanika Riyadh.

“While there is growth potential in the market, it is becoming a more competitive landscape and one which will also have to contend with evolving customer preferences. The conditions are ripe for new business relationships for those wishing to succeed in this transformative environment,” he added.

Zahoor Siddique, vice president of ACE, said: “Future vehicles will become more complex and challenging for the aftermarket industry. It is therefore imperative for manufacturers, local garages, technicians and mechanics to upskill and remain above the curve. 

 “Automechanika Riyadh is one such platform that can enable us to share and learn what the industry needs to unleash its potential.”

Two major US players — disc pad producer Giant Manufacturing and United Motors Mopar, the Kingdom’s sole distributor of Chrysler, Dodge, Jeep and Fiat cars — forecast a bullish market over the next few years.

Giant’s vice president, Eli Youssian, said he believed car sales in the Kingdom would grow by 9 percent annually until 2025, while United Motors District CEO Hassan Elshamarani expected another three million female drivers to be on the Kingdom’s roads by the end of the year.

Both Giant and United Motors launched new products at the show, with the former rolling out its new German-engineered Euro Premium Metallic Disc brake pads, and the latter introducing its Magneti Marelli spare parts.

The high potential of the new-look Saudi automotive landscape has also struck a major chord with South Korean suppliers.

The show’s Korean pavilion is hosting new-to-market entrants and existing suppliers all looking for business partners. With products from wiper blades to filters and air-conditioning parts to brake pads, the Korean contingent was positive about the Kingdom’s prospects.

One exhibitor, D Only Automotive, is looking to ring fence 10 percent of the Saudi brake market. “With more vehicles on the road, demand for brakes will increase, (so) we believe this is possible,” said President Jeon JaeWon.

Global research and analytics firm Aranca — Automechanika’s knowledge partner — has forecast that Saudi Arabia’s automotive spare parts and service market will grow at approximately 6 percent over the next five years to reach a value of $10.15 billion by 2023.

“The spare parts and service market for passenger cars alone is expected to eclipse $6.9 billion by 2023,” said Vishal Sanghavi, Aranca’s automotive practice head.