Oil prices dive $2 per barrel on fear Fed rate hikes will hurt demand

Brent crude futures fell $2.26 cents, or 2 percent, to $109.48 by 1:04 p.m. ET (1704 GMT). US West Texas Intermediate (WTI) crude futures were down $2.48, or 2.3%, at $103.71.
Brent crude futures fell $2.26 cents, or 2 percent, to $109.48 by 1:04 p.m. ET (1704 GMT). US West Texas Intermediate (WTI) crude futures were down $2.48, or 2.3%, at $103.71.
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Updated 23 June 2022

Oil prices dive $2 per barrel on fear Fed rate hikes will hurt demand

Oil prices dive $2 per barrel on fear Fed rate hikes will hurt demand

NEW YORK: Oil prices fell by more than $2 a barrel on Thursday in volatile trading as investors weighed the risk that rising US interest rates could trigger a recession and cut demand for fuel.

Brent crude futures fell $2.26 cents, or 2 percent, to $109.48 by 1:04 p.m. ET (1704 GMT). US West Texas Intermediate (WTI) crude futures were down $2.48, or 2.3%, at $103.71.

US Federal Reserve chief Jerome Powell said the central bank’s focus on curbing inflation was “unconditional” and the labor market was unsustainably strong, comments that stoked fears of more rate hikes.

Investors have been trying to assess whether inflation-fighting central banks could push the world economy into recession as they raise interest rates.

“Recession fears have their grip on markets, but the mood swing is rather one of ebbing optimism than swelling pessimism,” said Julius Baer analyst Norbert Rucker.

Investors were also concerned that high gasoline prices had hit a ceiling and demand destruction would soon set in, said Robert Yawger, director of energy futures at Mizuho in New York.

“That’s definitely worked its way into the conversation,” said Yawger, who added that he thought gasoline still had room to rise. 

US retail prices are currently averaging $4.94 a gallon, down about 10 cents from the peak, according to AAA.

Even off the highs, fuel prices remained feverishly strong and led US officials and oil executives to meet to try to agree on a plan to ease the pain at the pump. Major US oil refiners and Energy Secretary Jennifer Granholm emerged from an emergency meeting over the issue with no concrete solutions, according to a source familiar with the discussions, but the two sides agreed to continue talking.

The most recent estimates by the American Petroleum Institute, according to market sources, showed US crude and gasoline inventories rising last week, which also weighed on prices, Yawger said.

Official weekly estimates for US oil inventories were scheduled to be released on Thursday but technical problems will delay those figures until next week, the US Energy Information Administration said.

Russia continues to find alternative customers for its oil, with China and India among the biggest buyers now as Western countries have sanctioned Moscow's over the invasion of Ukraine.

China’s crude oil imports from Russia in May were up 55 percent from a year earlier and at record highs.

India is providing safety certification for dozens of ships managed by a subsidiary of Russian shipping group Sovcomflot, enabling oil exports to India and elsewhere after Western certifiers withdrew their services. 


Saudi IT firm solutions secure $267m for acquisition of Egypt’s Giza Systems

Saudi IT firm solutions secure $267m for acquisition of Egypt’s Giza Systems
Updated 12 sec ago

Saudi IT firm solutions secure $267m for acquisition of Egypt’s Giza Systems

Saudi IT firm solutions secure $267m for acquisition of Egypt’s Giza Systems

RIYADH: IT firm solutions by stc, a unit of Saudi Telecom Co., has obtained Shariah-compliant banking facilities worth SR1 billion ($267 million).

Formally known as Arabian Internet and Telecommunication Services Co., the firm signed the financing deals with Saudi National Bank, according to a bourse filing.

Proceeds from the facilities, with a duration of one and five years, will partly be used to fund the recent acquisition of Egypt’s Giza Systems.

solutions by stc had earlier acquired 89.5 percent of Giza Systems, in addition to 34 percent of Giza Arabia, a subsidiary of Giza Systems, in a $158 million deal.


Saudi contracting firm number reaches 165K as projects value crossed $5.3tln  

Saudi contracting firm number reaches 165K as projects value crossed $5.3tln  
Updated 1 min 31 sec ago

Saudi contracting firm number reaches 165K as projects value crossed $5.3tln  

Saudi contracting firm number reaches 165K as projects value crossed $5.3tln  

RIYADH: The number of companies operating in Saudi Arabia’s contracting sector has crossed 165,000, with small to large enterprises employing 3 million workers, Saudi Press Agency reported citing the Saudi Contractors Authority.  

The contracting sector employs workers from various professions, with more jobs being localized under legislative efforts, chairman of the board of directors of the Saudi Contractors Authority, Zakariya Al-Abdulqader said.

The value of projects in the contracting sector over the past five years totaled SR20 trillion ($5.3 trillion), demonstrating its importance and its developmental role, the head of the National Committee for Contractors in the Federation of Saudi Chambers, Hamad Al-Hammad said.


NEOM’s energy plant first to produce green hydrogen in commercial quantities, says expert

NEOM’s energy plant first to produce green hydrogen in commercial quantities, says expert
Updated 11 min 58 sec ago

NEOM’s energy plant first to produce green hydrogen in commercial quantities, says expert

NEOM’s energy plant first to produce green hydrogen in commercial quantities, says expert

RIYADH: The hydrogen plant in NEOM, Saudi Arabia's $500-billion futuristic city, will be the first of its kind to produce green hydrogen at a level that can be sold, according to Alicia Eastman, co-founder and managing director at Intercontinental Energy. 

“I think NEOM is going to be the first plant to produce green hydrogen in commercial quantities,” said Eastman while speaking at a virtual conference during the MENA Energy Week.

Eastman added that Intercontinental Energy is working together with countries in the Middle East to assist them in providing green hydrogen, and to deliver green ammonia. 

“Our focus is on large projects. We have signed a memorandum of understanding with Saudi Aramco to make both blue and green hydrogen. I look forward to seeing Aramco materializing their plans in hydrogen,” she further added. 

Eastment also made it clear that digital solutions and the adoption of technology are very much needed to go sustainable in the future. 


Aramco exploring options to reduce cost of hydrogen production, says official

Aramco exploring options to reduce cost of hydrogen production, says official
Updated 14 min 29 sec ago

Aramco exploring options to reduce cost of hydrogen production, says official

Aramco exploring options to reduce cost of hydrogen production, says official

RIYADH: Transition to low-carbon alternatives including green and blue hydrogen demands huge investments and a marketplace that needs collaboration between different nations, said Nabil Nuaim, Saudi Aramco’s chief digital officer.

While speaking at a virtual conference during the MEA Energy Week, Nuaim said that Saudi Aramco, being a carrier, needs to optimize the projects and make them cost-efficient.

He also added that energy generation using green hydrogen is still in the adoption phase.

Nuaim further noted that digital transformation is very much necessary to enable a hydrogen economy, where Aramco will supply and become a source of fuel.

“Hydrogen has a huge significance in the energy sector. It is a very good energy source. It has a significant energy value in the transportation sector,” he said.

Nuaim also said that Aramco is looking at options to reduce the cost of hydrogen production and transport, and the company is checking whether existing pipelines and infrastructure are sufficient enough for the future.

He added: “We are involved with blue hydrogen with very specific targets. Transportation of the fuel is very important, and the safety should be checked and assured.”

 


‘Worst case’ is Europe cutting renewable investment due to Ukraine war: Energy consultant

‘Worst case’ is Europe cutting renewable investment due to Ukraine war: Energy consultant
Updated 20 min 20 sec ago

‘Worst case’ is Europe cutting renewable investment due to Ukraine war: Energy consultant

‘Worst case’ is Europe cutting renewable investment due to Ukraine war: Energy consultant

RIYADH: Europe turning its back on renewable energy investment as the fuel crisis bites is a “worst-case scenario”, according to energy consultant Pierre Samaties, partner at consultancy firm Roland Berger.

Speaking at a virtual conference during the MEA Energy Week, Samaties speculated that western countries could turn back to traditional forms of energy production in response to Russia’s invasion of Ukraine.

“The worst-case scenario is that Europe will go back to the use of coal and gas instead of developing renewables due to shortage or fuel prices going up, but I’m optimistic,” said Samaties.

He added that traditional energy still has its investment potential as it is needed until sufficient renewable sources are available,

“You need traditional technology until you reach a point where you have enough renewable resources. Traditional energy is still a place of investment. You need to still have conventional power,” said Samaties, adding that Saudi Arabia and the UAE are spearheading energy transition in the region.

“Saudi Arabia’s NEOM is having the biggest hydrogen project that is very promising. UAE is also heavily exploring hydrogen export opportunities,” added Samaties.

During his speech, he noted budgets for energy transition is a very tough issue.

According to Samaties, policymakers should first think about the available power options and should go ahead by accelerating investments in renewable sources.

Talking about the vitality of investing in technology in the sector he said: “Technologies to invest in include advancing storage technology, achieving a renaissance of nuclear power, and decarbonization storage.”

He further noted that the energy sector can move much faster than the initial forecast. Samaties also added that the usage of solar energy on glass technology will contribute a lot to the energy transition.