Saudi Arabia regains position as world’s top oil exporter

Workers at an Aramco onshore rig. Saudi Arabia exported nearly 11 million barrels of oil per day in April. (Aramco)
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Updated 16 June 2020

Saudi Arabia regains position as world’s top oil exporter

  • Kingdom knocks US off top spot it gained last year
  • IEA forecasts less dramatic fall in demand

DUBAI: Saudi Arabia has emerged from three months of oil market volatility as the world’s biggest oil exporter once more, knocking the US off the top slot it gained last year.

Industry experts calculated that in April — when oil prices crashed because of pandemic lockdowns — the Kingdom exported nearly 11 million barrels of oil per day, a record, and the US about 8.6 million barrels.

Both countries’ exports fell in May, after the historic OPEC+ deal to cut output, but the Kingdom was still ahead.

The trend is likely to continue for most of this year, as American production suffers from shut-ins and bankruptcies in its price-sensitive shale oil operations, despite continuing Saudi cuts.

“Over the course of the second quarter of 2020 as a whole Saudi Arabia ought to easily stay ahead of the chasing pack,” said the Middle East Economic Survey, which published the figures compiled by industry experts.

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The US overtook Saudi Arabia as the world’s top exporter in the middle of last year. Since the price of the US benchmark, West Texas Intermediate, collapsed in April, many shale producers have cut back on their “rig count” and some have filed for bankruptcy.

Oil prices shrugged off weekend worries over a possible second wave of virus infection in China. Brent crude, the global benchmark, rose back above $40, while West Texas Intermediate stood at $37.

A report from the International Energy Agency forecast a less dramatic fall in 2020 oil demand than expected. Demand would be 91.7 million barrels per day, about 500,000 more than the agency’s previous forecast, but still the biggest fall in history. There would be no recovery in pre-pandemic air fuel demand until 2022 because of the “dire situation” in the aviation industry, the IEA said.

In China, oil demand had recovered fast in March and April, and Indian demand rose sharply in May. “While the oil market remains fragile, the recent modest recovery in prices suggests that the first half of 2020 is ending on a more optimistic note,” the agency said.

“Initiatives in the form of the OPEC+ agreement and the meeting of G20 energy ministers have made a major contribution to restoring stability to the market.”

The joint ministerial monitoring committee of the OPEC+ alliance meets at the end of this week to assess compliance with agreed cuts, amid some speculation that they could be extended for at least another month.


Turkey on brink of recession as economy collapses

Updated 13 August 2020

Turkey on brink of recession as economy collapses

  • Consumer debt has increased by 25 percent to more than $100 billion in the past three months

JEDDAH: President Recep Tayyip Erdogan’s popularity is plunging in lockstep with Turkey’s collapsing economy and the country is on the verge of a potentially devastating recession, financial experts have told Arab News.
The value of the Turkish lira has fallen to 7.30 against the US dollar and the central bank has spent $65 billion to prop up the currency, according to the US investment bank Goldman Sachs.
Consumer debt has increased by 25 percent to more than $100 billion in the past three months as the government moved to help families during the coronavirus pandemic, but the result has been a surge in inflation to 12 percent.
With the falling lira and increased price of imported goods, the living standards of many Turks who earn in lira but have dollar debts have fallen sharply.
The economy is expected to shrink by about 4 percent this year. The official unemployment rate remains at 12.8 percent because layoffs are banned, although many experts say the real figures are far higher.
To complete the perfect storm, tourism revenues and exports have been decimated by the pandemic, and foreign capital has fled amid fears over economic trends and the independence of the central bank.
Wolfango Piccoli, of Teneo Intelligence in London, said logic dictated an increase in interest rates but “this is unlikely to happen.”
Piccoli said central bank officials would strive to avoid an outright rate hike at their monetary policy meeting on Aug. 20. “A mix of controlled devaluation and backdoor policies, such as limiting Turkish lira’s liquidity, remains their preferred approach,” he said.
There is speculation of snap elections, and Erdogan’s view is that higher interest rates cause inflation, despite considerable economic evidence to the contrary.