Oil Updates — Crude climbs; US drillers add oil and gas rigs; EU proposes changes to planned Russian embargo

Oil Updates — Crude climbs; US drillers add oil and gas rigs; EU proposes changes to planned Russian embargo
Oil prices rose nearly 1.5 percent on Friday, posting a second straight weekly increase. (Shutterstock)
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Updated 08 May 2022

Oil Updates — Crude climbs; US drillers add oil and gas rigs; EU proposes changes to planned Russian embargo

Oil Updates — Crude climbs; US drillers add oil and gas rigs; EU proposes changes to planned Russian embargo

RIYADH: Oil prices rose nearly 1.5 percent on Friday, posting a second straight weekly increase as impending EU sanctions on Russian oil raised the prospect of tighter supply and had traders shrugging off worries about global economic growth.

Brent futures rose $1.49, or 1.3 percent, to settle at $112.39 per barrel. US West Texas Intermediate crude climbed $1.51, or 1.4 percent, to end at $109.77 a barrel.

US drillers add oil and gas rigs for the seventh week in a row — Baker Hughes

US energy firms last week added oil and natural gas rigs for a seventh week in a row amid high prices and prodding by the government, although most shale producers were prioritizing shareholder returns over new spending on production.

The oil and gas rig count, an early indicator of future output, rose by seven to 705 in the week to May 6, its highest since March 2020, energy services firm Baker Hughes Co. said in its closely followed report on Friday.

Baker Hughes said that puts the total rig count up 257, or 57 percent, over this time last year.

US oil rigs rose by five to 557 this week, their highest since April 2020, while gas rigs gained two to 146, their highest since September 2019.

Since Moscow invaded Ukraine on Feb. 24, the US government has urged drillers to produce more oil and gas to reduce domestic prices and help allies break their dependence on Russian energy.

Even though the rig count has climbed for a record 21 months in a row through April, weekly increases have mostly been in single digits and oil production is still far below pre-pandemic record levels.

US crude production, which hit a record 12.3 million barrels per day in 2019, was set to rise from 11.2 million bpd in 2021 to 12.0 million bpd in 2022 and 13.0 million bpd in 2023, according to federal energy data. 

Top US shale producers this week reported blockbuster first-quarter profits and most poured cash into higher dividends and share buybacks as oil prices churned along at the highest levels in years.

But with oil prices up about 47 percent so far this year to about $110 a barrel, after soaring 55 percent in 2021, a growing number of energy firms said they plan to raise capital spending for the second year in a row in 2022.

US financial services firm Cowen & Co. said the independent exploration and production companies it tracks plan to boost spending by about 29 percent in 2022 versus 2021 after increasing spending by about 4 percent in 2021 versus 2020.

That follows a drop in capital expenditures of roughly 48 percent in 2020 and 12 percent in 2019.

US investment bank Piper Sandler forecast the US total rig count would rise to an average of 684 in 2022 and 783 in 2023. That compares with an average of 478 in 2021, according to Baker Hughes.

The annual average rig count peaked at 1,919 in 2012 and hit a record low of 433 in 2020, according to Baker Hughes data going back to 1988.

EU tweaks Russia oil sanctions plan: sources

The EU proposed changes to its planned embargo on Russian oil to give Hungary, Slovakia and the Czech Republic more time to shift their energy supplies, EU sources said, although failed to reach a breakthrough on May 6.

The EU executive set out the embargo this week as part of its toughest-yet package of sanctions against Russia over the conflict in Ukraine. But Hungary and other EU member states said they were worried about the impact on their own economies. 

The tweaked proposal — which EU envoys discussed on May 6 morning without reaching an agreement — would give the three countries help to upgrade their refineries to process oil from elsewhere and delay their exit from Russian oil to 2024, the sources said.

The initial proposal called for an end to EU imports of Russian crude and oil products by the end of this year.

There would also be a three-month transition before banning EU shipping services from transporting Russian oil, instead of the initial one month — to address concerns raised by Greece, Malta and Cyprus about their shipping companies, one of the sources added. 

Diplomats said talks were complex but many expressed confidence all 27 EU governments could agree before next week.

One said the Commission was in talks on Friday afternoon to find a compromise with Budapest and possibly Bratislava.

“I don’t think we’ll see a breakthrough today, more likely at the weekend,” the diplomat said.

Under the original proposal, most EU countries had to stop buying Russian crude oil six months after the adoption of the measures, and halt imports of refined oil products from Russia by the end of the year. Hungary and Slovakia were initially given until the end of 2023 to adapt.

Under the changes, Hungary and Slovakia would be able to buy Russian oil from pipelines until the end of 2024, and the Czech Republic could continue until June 2024, if it does not get oil via a pipeline from southern Europe earlier, the sources said.

Bulgaria had also asked for exemptions, if others obtained them, but was not offered concessions on deadlines, “because they don’t have a real point,” one official said. The other three countries that were granted more leeway “have an objective problem,” the official added.

One of the sources said the extended deadlines were calculated on the likely construction times for pipeline upgrades. The official said Hungary and Slovakia accounted for only 6 percent of the EU’s oil imports from Russia, and the exemptions would not change the impact of the ban on the Russian economy.

Top EU diplomat Josep Borrell said on Friday he would call an extraordinary meeting of EU foreign affairs ministers next week if no deal was reached by the weekend. 

Ukraine calls for complete Russian embargo

Meanwhile, Ukrainian Finance Minister Serhiy Marchenko called on May 6 for a complete international embargo on Russian oil and gas over Moscow’s invasion of Ukraine.

Marchenko told an online briefing that Ukraine was struggling to balance its budget after 10 weeks of war and said that, as finance minister, he could not be satisfied with the speed at which financial assistance was arriving from abroad.

Referring to what he called the “insufficiency of the sanctions that have been introduced,” he said the high price of oil and natural gas meant Moscow had a budget surplus and “they feel quite comfortable.”

“The main issue is a complete embargo on the purchase of gas and oil from the Russian Federation. This is something that needs to be worked on and that the Ukrainian authorities are actively working on,” he said. “This will make it possible to remove the possibility of financing the war.”

(With inputs from Reuters)


Saudi banks shut down 42 branches in 12 months, increase digital presence

Saudi banks shut down 42 branches in 12 months, increase digital presence
Updated 14 sec ago

Saudi banks shut down 42 branches in 12 months, increase digital presence

Saudi banks shut down 42 branches in 12 months, increase digital presence
  • More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise

CAIRO: Saudi banks shut down 42 branches over the year ending in June, revealed the Saudi Central Bank, also known as SAMA.

The number of bank branches in Saudi Arabia also inched lower to 1,927 in the second quarter this year from 1,932 in the same quarter last year.

So, what are the reasons behind this decreased number of bank branches, and when did this trend begin?

The most common assumption would be the COVID-19 pandemic and its prolonged effect on the entire economy, including the financial and banking sectors.

Between the fourth quarter of 2019 and the first quarter of 2021, which includes the peak of the pandemic, 68 branches were closed. 

Also, bank branches continued to decrease quarterly long after lifting COVID-19 restrictions, albeit there was no clear trend.

Between May 2020 and June this year, 137 bank branches in the Kingdom shut shop.

It is worth mentioning that branches that have closed are not second-tier or underperforming banks but some of the largest and well-performing ones. For instance, Al Rajhi Bank, which had 543 branches in the fourth quarter of 2020, reduced it to 515 by June this year.

While COVID-19 sparked the digital revolution, advanced and innovative technologies did the job.

The past three years of the pandemic slowly began the transformation toward digital banking, which can be seen closely in the Saudi banking sector.

More banks are switching to increased virtual interactions and digitalization, and new banks are opening entirely on that premise.

Last February, SAMA licensed and welcomed the Kingdom’s third digital bank D360 Bank, following the launch of STC and Saudi Digital Bank in June last year.

Similarly, according to SAMA, 19 Saudi fintech companies have been authorized to provide payment services, consumer microfinance and electronic insurance brokerage over the past few months.

So, what does the future of digital banking in the Kingdom hold and will the population accept this digital revolution?

In a survey conducted by Ipsos in the Kingdom in October 2021, the research major pointed out that 61 percent still trust traditional banks, while 47 percent counted on mobile service providers and 40 percent depended on popular digital brands to carry out financial transactions.

The report added: “63 percent said that they will be making all their financial transactions through digital banking in the future, and 58 percent believe that people would no longer use cash as a payment method.”


Emirates sets date for flagship Airbus A380’s return to Perth route

Emirates sets date for flagship Airbus A380’s return to Perth route
Updated 18 min 44 sec ago

Emirates sets date for flagship Airbus A380’s return to Perth route

Emirates sets date for flagship Airbus A380’s return to Perth route
  • The daily A380 flights will replace a Boeing 777-300ER service, increasing seating capacity by nearly 500 seats per flight
  • The announcement comes as the airline celebrates 20 years of flying to the city in Western Australia

LONDON: Emirates announced that it will reintroduce its flagship Airbus A380 on daily flights between Dubai and Perth from Dec. 1, as it ramps up its services to Australia in response to growing demand.

The A380 service to the city in Western Australia will replace the airline’s current daily Boeing 777-300ER service, increasing seating capacity by nearly 500 seats on each flight.

Flight EK420 from Dubai will depart at 2:45 a.m. and arrive in Perth at 5.20 p.m. the same day, while flight EK421 will take off from Perth at 10:20 p.m. and land in Dubai at 5:25 a.m. the following day.

Nearly 6 million passengers have flown with Emirates between Perth and Dubai since its inaugural flight between the cities in August 2002, according to the airline, on more more than 24,000 flights traveling more than 220 million kilometers.

The airline said there has been a significant increase in passenger bookings to and from Australia of late, with significant demand across all cabins, in particular since the introduction on Aug. 1 of a Premium Economy service on one of its daily Sydney services.

It comes as Emirates celebrates 20 years of flying to Perth. During this time, Emirates said it has also been a long-standing supporter of arts, culture and sporting institutions in Western Australia, investing in a variety of initiatives.

The airline added that Emirates SkyCargo, its cargo division, has also been a significant contributor to the local economy, carrying exports of Australian fruit and vegetables, meat and mining equipment to destinations throughout the airline’s global route network, including the Middle East, Europe and beyond.


Heathrow extends passenger cap into October

Heathrow extends passenger cap into October
Updated 15 August 2022

Heathrow extends passenger cap into October

Heathrow extends passenger cap into October

LONDON: Heathrow airport said on Monday it was extending its capacity limit through most of October to reduce the chaos caused by a post-pandemic surge in passengers amid a lack of staff.

Europe’s largest airport introduced a cap of 100,000 departing passengers per day in July, which was originally slated to have expired at the end of September.

“Since the cap was introduced, passenger journeys have improved with fewer last-minute cancelations, better punctuality and shorter wait times for bags,” said Heathrow.

It said the extension through Oct. 29 “will provide passengers with confidence ahead of their half-term getaways.”

Airlines scheduled thousands of flights in Europe this summer season to capture a boom in travel demand following the relaxation of COVID-19 restrictions.

But having cut back staff drastically during the pandemic, both airlines and airports found it difficult to hire enough employees.

This led to long waits to check-in, clear security and collect bags in many airports across Europe, as well as to cancelations of flights due to lack of crew.

The Heathrow cap was set at roughly 4,000 passengers per day fewer than scheduled flight capacity.

Airlines have canceled flights in response to the cap, as well as in recognition of their staffing levels.

Heathrow said it was regularly reviewing the situation and would remove the cap early if it sees an improvement.

“We want to remove the cap as soon as possible, but we can only do so when we are confident that everyone operating at the airport has the resources to deliver the service our passengers deserve,” Heathrow Chief Commercial Officer Ross Baker said.

Amsterdam and Frankfurt airports have also instituted caps.


Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021
Updated 15 August 2022

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

RIYADH: Saudi Arabia’s agricultural sector grew at a rate of 7.8 percent in 2021 as compared to the previous year, the Saudi Press Agency reported on Monday.

The agricultural output during the period was valued at SR72.25 billion ($19.23 billion) — the highest in more than five years — as compared to SR67.05 billion in the previous year.

The Ministry of Environment, Water and Agriculture attributed this growth to its strategies implemented in line with Vision 2030. In addition to that recovery from the coronavirus disease pandemic also helped the sector’s growth, the ministry added.

The Kingdom’s agriculture output in 2017 was estimated at SR65.29 billion, around SR65.49 billion in 2018, and SR66.20 billion in 2019.

It recorded around SR67.05 billion in 2020, noting that the sector’s contribution to the gross domestic product in general amounted to 2.3 percent last year, while the contribution of agricultural output to non-oil GDP was 3.6 percent, an increase of 0.2 percent compared to 2020.

The ministry highlighted that the Kingdom’s balance of trade achieved a surplus of SR462.5 billion, an increase from the year 2020, which recorded SR134.5 billion, due to increased exports during 2021. The agricultural exports amounted to SR13.16 billion.


PIF, Cain International invest $900m in Aman Group to boost its global expansion

PIF, Cain International invest $900m in Aman Group to boost its global expansion
Updated 15 August 2022

PIF, Cain International invest $900m in Aman Group to boost its global expansion

PIF, Cain International invest $900m in Aman Group to boost its global expansion

RIYADH: Saudi Arabia’s Public Investment Fund and Cain International have invested $900 million in Aman Group to help accelerate the global expansion of the hospitality and lifestyle brand management company.

The investment will be used to enhance the existing portfolio, drive the construction of the pipeline of Aman and Janu destinations, as well as support the acquisition and development of additional sites, according to a statement issued on Monday. 

Following the new funding, the company is now valued at over $3billion.

Aman is a renowned collection of 34 hotels across 20 countries, 12 of which include Aman Branded Residences, with nine further hotels and residences projects under construction and a committed pipeline of additional destinations in countries including USA, Japan, Mexico, South Korea, Saudi Arabia, and European destinations, among others. 

Vlad Doronin, owner, chairman and CEO of Aman Group, said: “The investment from PIF and Cain International is a vote of confidence in my vision and the work the team has done over the last eight years, cementing the brand’s evolution and ability to deliver this vision at pace.”

Commenting on the investment, Turqi Al-Nowaiser, deputy governor and head of International Investments Division at PIF, said: “The investment is in line with PIF’s strategy to invest in promising sectors to achieve sustainable, attractive returns in Saudi Arabia and globally.”

“We are excited to be investing in this phenomenal brand and look forward to building upon our longstanding partnership with Vlad and his team,” said Jonathan Goldstein, CEO and co- founder of Cain International.