Price of oil surges past $80-a-barrel landmark

Price of oil surges past $80-a-barrel landmark
Oil has risen in price by more than 90 percent over the past year. (Shutterstock)
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Updated 29 September 2021

Price of oil surges past $80-a-barrel landmark

Price of oil surges past $80-a-barrel landmark
  • OPEC urges investment in production

DUBAI: The price of oil surged above $80 a barrel on Tuesday amid soaring demand from global economies and increasingly tight supply.
Brent crude, the global benchmark, jumped past the psychologically significant landmark for the first time in three years, after five days of rising prices.
Oil analysts believe the surge could have a long way to go. Christyan Malek, head of oil and gas at US bank JP Morgan, told Arab News: “The bull case suggests that oil could hit more than $100 a barrel by 2023, though it could reach that level within the next six to 12 months.”
Another US banking giant, Goldman Sachs, this week forecast a price of $90 a barrel for Brent by the end of this year.
Oil has risen in price by more than 90 percent over the past year as the output strategy of OPEC+ — the oil alliance led by Saudi Arabia and Russia — drained the global oil glut that depressed prices in 2020.
Global crude inventories that ballooned during the pandemic have shrunk to their lowest levels since January 2020 as the biggest oil consumers, the US and China, fuel their recovery.
Several other factors are also behind the recent run. Robin Mills, chief executive of consultancy Qamar Energy, said it was down to “gas shortages and revived demand colliding with US hurricanes and maintenance delays.”
Adding to the upward pressure on prices, oil demand will grow sharply in the next few years as economies recover from the pandemic, OPEC forecast in its World Oil Outlook published on Tuesday.
“Energy and oil demand have picked up significantly in 2021 after the massive drop in 2020,” OPEC Secretary-General Mohammad Barkindo said. “Continued expansion is forecast for the longer term.”
Oil use will rise by 1.7 million barrels per day in 2023 to 101.6 million bpd, OPEC said, adding to robust growth already predicted for 2021 and 2022, and pushing demand back above the pre-pandemic 2019 rate.
The organization said the world must continue investing in oil production to avert an energy shortage, despite the transition to renewables. Upstream oil capital spending dropped by nearly 30 percent to about $240 billion last year because of the pandemic.
“It is clear that underinvestment remains one of the great challenges for the oil industry,” Barkindo said. “Without the necessary investments, there is the potential for further volatility and a future energy shortfall.”
Nevertheless, OPEC is upbeat about its prospects. “Oil is still expected to retain its No. 1 position in the energy mix,” Barkindo said.


Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap
Updated 18 sec ago

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

Asia’s growth trimmed; UK inflation eases off slightly: Economic wrap

In its new regional outlook, the International Monetary Fund cut its growth forecast for Asia in 2021 to 6.5 percent, compared to the 7.6 percent it speculated in April. 

The international organization cited supply chain disruptions, inflation fears and a rise in Covid-19 infections as factors that could hamper growth in the region.

However, the 2022 growth forecast has been upwardly tweaked to 5.7 percent — up from the 5.3 percent April forecast.

Meanwhile, China is expected to grow by 8 percent this year and 5.6 percent in 2022.

UK inflation eases

The UK’s annual inflation rate tapered off to 3.1 percent in September 2021 down from its nine-year high of 3.2 percent in August, data from the Office for National Statistics revealed. 

Transport prices rose by 8.4 percent, helping fuel some of the country’s inflationary pressures. Conversely, rises in restaurants and hotels costs eased to 5.1 percent in September compared to 8.6 percent in August.

Month-on-month inflation also decreased to 0.3 percent in September — down from 0.7 percent in August.

In addition, the yearly core inflation rate, which excludes price changes in volatile items like food and energy, reached 2.9 percent in September, falling from 3.1 percent in the previous month.

German producer prices

Germany’s annual rise in producer prices climbed to 14.2 percent in September, according to official data.

Surging energy prices, last year’s low base effects and the current supply chain problems all meant that the country experienced its highest increase since October 1974.

Energy costs leapt by 32.6 percent while prices of intermediate goods rose by 17.4 percent.

This was accompanied by a month-on-month 2.3 percent increase in producer prices in September.

Japan’s trade deficit

The Japanese trade balance recorded a deficit of JPY622.8 billion ($5.44 billion) in September, compared to a JPY667.4 billion ($5.83 billion) surplus in the same month of last year, official data showed. This is the second consecutive month in which a deficit was posted for the country. 

Japanese imports leapt to a 34-month high of JPY7,463 billion ($65.19 billion) in September as it increased by an annual rate of 38.6 percent. Energy imports soared by 90 percent while purchases of electrical machinery jumped by 33.2 percent. Australian imports experienced the highest increase, climbing by 99.5 percent.

Meanwhile, the country’s exports jumped by 13 percent year-on-year to JPY6,841 billion ($59.76 billion) in September 2021. This was fuelled by a 23.7 percent increase in machinery exports. Exports of chemicals also rose considerably, growing by a 27.4 percent yearly rate.

Fed to hold on rates

A majority of economists expect the Federal Reserve to wait until 2023 before raising its rates, a survey conducted by Reuters showed.

Surveyed economists think that the biggest risk facing the US economy in the coming period is rising inflation.

China’s FDI 

Based on China's commerce ministry data, foreign direct investment (FDI) inflows to the country surged by 19.6 percent in the first nine months of 2021, when compared to the same period of the last year, to reach $134.7 billion.


Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program
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Updated 12 min 38 sec ago

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program

Saudi Arabia, Kuwait, UAE reiterate support for Bahrain's fiscal program
  • The fiscal balance program - a set of reforms aimed at balancing the budget - was linked to the pledged $10 billion

Saudi Arabia, Kuwait and the United Arab Emirates reiterated their support for Bahrain's plans to balance its budget, a move expected to help their neighbor in the debt capital markets despite delays in plans to fix its heavily indebted finances.


The three Gulf allies extended a $10 billion aid package to Bahrain in 2018 to help it avoid a credit crunch.

Last month Bahrain said that due to the coronavirus crisis last year, it had postponed the target year for a balanced budget to 2024, and announced plans to hike a value-added tax to boost state coffers.


The fiscal balance program - a set of reforms aimed at balancing the budget - was linked to the pledged $10 billion.

The ministers of finance of wealthier Saudi Arabia, Kuwait, and the UAE met with Bahrain's finance minister on Oct. 19 to discuss Bahrain's progress in improving its finances.

"The ministers welcomed the efforts made by the government of Bahrain in implementing the Fiscal Balance Program, and the progress made by the government despite the challenges posed by the COVID-19 pandemic", the three countries said in a joint statement.

"The Ministers affirmed their support to the Kingdom of Bahrain’s efforts in pursuing further reforms to enhance fiscal stability and strengthen sustainable economic growth."

Bahrain's delaying of its fiscal balance program, which pushed back the zero-deficit target by two years, was seen as unlikely to deter investors from buying its debt due to expectations of continued support from richer Gulf allies, bankers and analysts have previously told Reuters.

Bahrain's public debt climbed to 133 percent of gross domestic product (GDP) last year from 102 percent in 2019, according to the International Monetary Fund.

S&P forecasts Bahrain's budget deficit, which was 16.8 percent of GDP last year, to average 5 percent between 2021 and 2024, excluding the impact of a possible hike in value-added tax.

The Arab Monetary Fund assessed the fiscal program achievements, the statement said.

 

 

 

 


Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom
Updated 13 min 30 sec ago

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

Saudi Minister uses US trip to urge investors to 'seize opportunities' in the Kingdom

The Saudi minister of investment will stress the Kingdom's position as a major global investment destination during his visit to the US, according to the Saudi Press Agency. 

Khalid Al-Falih will meet a group of US officials on Wednesday to strengthen the existing strategic trade and investment partnership between the two countries, the agency reported. 

“We consider American investors to be our partners, and we hope that they will seize the tremendous opportunities that are presented in the transitional stage we are living in,” Al-Falih said in a statement. 

The trip follows the launch of the National Investment Strategy by the crown prince, Mohammed bin Salman, last week.

"The National Investment Strategy will bring about a fundamental change in the investment landscape in Saudi Arabia, which will provide unprecedented opportunities and advantages for investors,” the minister noted. 


Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year
Updated 23 min 34 sec ago

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

Sovereign Fund of Egypt CEO bids to double assets to $1.8bn in a year

The Sovereign Fund of Egypt plans to double its assets from between EGP13-14 billion ($827-$891 million) to as much as EGP28 billion next year, said chief executive Ayman Soliman, reported Al Sharq.

Soliman said the fund’s drive for growth will focus on infrastructure, water desalination and renewable energy, such as the production of green energy with Norwegian green energy firm Scatec and Abu Dhabi-Dutch joint venture fertiliser producer Fertiglobe.

Last week, the fund signed a deal with Scatec and Fertiglobe to build a 50 to 100 megawatt ammonia plant in Ain Sokhna, 75 miles east of Cairo, for an undisclosed sum, which it said, “is the first step towards developing a green hydrogen hub in Egypt”.

The head of the fund said its investments over the next 12 months would also include warehouses for strategic goods, medicine and education.

The fund, established in 2018, says it was set up to co-invest with local and foreign financial partners to “increase the private sector’s role in the economy and create jobs for Egypt’s young population”


TASI crosses 11,822 point mark in early trade: Market wrap

TASI crosses 11,822 point mark in early trade: Market wrap
Updated 55 min 1 sec ago

TASI crosses 11,822 point mark in early trade: Market wrap

TASI crosses 11,822 point mark in early trade: Market wrap

RIYADH: Saudi Arabia’s main market, Tadawul, traded up 0.3 percent on Wednesday morning, at 11,822 points.

Here’s a wrap of market movements as of 10:30 a.m. Riyadh time:

Saudi Fisheries Co. signed a non-binding Memorandum of Understanding with the Arabian Agricultural Services Co. to consider future cooperation regarding the factory at Al-Huraydah in Aseer region.

National Agricultural Marketing Co. (Thimar) signed a framework agreement with AlKhair Capital for advisory services.

Sipchem recorded a net profit of SR2.270 billion in the most recent nine-month period.

Advanced Petrochemical Co.’s board recommended a 6.5 percent cash dividend for Q3 2021. 

Al Rajhi REIT Fund appointed a legal counsel, after negotiations and judicial sessions, for the litigation against Al-Fouzan Trading & Contracting Co.

The board of Gulf Union Alahlia Cooperative Insurance has announced plans to increase capital by offering right issues