Oil prices jump as OPEC+ announces output cut of 100,000 bpd

Update Oil prices jump as OPEC+ announces output cut of 100,000 bpd
OPEC+ is set to begin its meeting at 13.00 CEST on Sep. 5.
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Updated 06 September 2022

Oil prices jump as OPEC+ announces output cut of 100,000 bpd

Oil prices jump as OPEC+ announces output cut of 100,000 bpd

RIYADH: Oil prices rose more than 3 percent on Monday as the Organization of the Petroleum Exporting Countries and its allies agreed a small production cut to bolster prices.

At a meeting at 1pm CEST on Monday Sept, 5, the group, which includes Russia and is known as OPEC+, agreed to reduce output by 100,000 barrels per day, with a statement saying “the production level was only intended for the month of September 2022.”

Brent crude futures futures for November delivery rose $3.43 to $96.45 a barrel, a 3.7 percent gain, by 9:14 a.m. EDT (1314 GMT).

US West Texas Intermediate crude was up $2.94, or 3.4 percent, at $89.87 after a 0.3 percent gain in the previous session. US markets are closed for a public holiday on Monday.

A statement on the Saudi Press Agency after the meeting said that OPEC+ had "noted the adverse impact of volatility and the decline in liquidity on the current oil market and the need to support the market’s stability and its efficient functioning."

It added: "The Meeting noted that higher volatility and increased uncertainties require continuous assessment of market conditions and readiness to make immediate adjustment to production in different forms, if needed, and that OPEC+ has the commitment, the flexibility, and the means within the existing mechanisms of the Declaration of Cooperation to deal with these challenges and provide guidance to the market."

The cut amounts to only 0.1 percent of global demand, prompting Oanda analyst Craig Erlam to say: “It’s the symbolic message the group wants to send to the markets more so than anything.”

He added: “What we’ve probably seen from the markets was pricing in most of the worst-case scenario.” .

The chairman of OPEC+, which includes Russia, said it would consider calling for an OPEC and non-OPEC ministerial meeting anytime to address market developments, if necessary.

A source said OPEC+ would hold its next meeting on Oct. 5.

Russia, the world's second-largest oil producer and a key OPEC+ member, does not support a production cut at this time and the producer group is likely to decide to keep output steady, the Wall Street Journal reported on Sunday, citing unnamed sources.

OPEC+ agreed to increase output by 648,000 bpd in both July and August, as they fully unwind nearly 10 million bpd of cuts implemented in May 2020 to counter the COVID-19 pandemic.

The group agreed last month to raise production quotas by another 100,000 bpd in September as it faced pressure from major consumers including the US, which are keen to cool prices.

A move to tighten supply was floated by Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, not long after that decision was taken, as he described the oil market as being “in a state of schizophrenia”.

His comments were later backed by Sudan and the UAE.

Algerian oil production in October will be at 1.057 million barrels per day (bpd), unchanged from September, Algeria’s Energy Ministry said in a statement on Monday.

Russian deputy PM

Russian Deputy Prime Minister Alexander Novak said on Monday that expectations of weaker global economic growth were behind a decision by Moscow and its OPEC allies to cut oil output.
Speaking on state television after the OPEC+ group agreed to reduce production by 100,000 barrels per day for October, Novak said the global energy market was characterised by heightened uncertainty at the moment.
“We are not talking about price formation, but about the adequacy of supply on the market, so that on the one hand there is no excess, and on the other there is no shortage,” Novak said, adding that the OPEC+ countries were largely meeting their production quotas under the deal.
Russia’s lucrative oil exports have become a major target for Western countries over Moscow’s military actions in Ukraine.
The EU has imposed a partial oil embargo that it says will cut 90 percent of Russian exports to the 27-member bloc when fully implemented.
And Group of Seven finance ministers last week announced plans to impose an oil price cap on Russia that could have far-reaching implications for its ability to secure tankers and insurance even on exports beyond the G7.
Novak said the plans for an oil price cap were creating heightened volatility on the world market. 



ACWA Power adds record desalination capacity to serve 5.5m more people daily 

ACWA Power adds record desalination capacity to serve 5.5m more people daily 
Updated 9 sec ago

ACWA Power adds record desalination capacity to serve 5.5m more people daily 

ACWA Power adds record desalination capacity to serve 5.5m more people daily 

RIYADH: Saudi-based ACWA Power created the largest water desalination capacity in the company’s history in 2022, enabling it to serve 5.5 million more people in the Gulf Cooperation Council region every day.

The power generation firm added a record-breaking 2.4 million cm3/day of water desalination capacity, according to a press release, through four reverse osmosis megaprojects in the Middle East pushing ACWA power’s aggregate water capacity up to 6.4 million cubic meters. 

Saudi Arabia’s water giant currently manages 16 projects in four different nations, and fulfills almost 30 percent of the Kingdom’s overall water needs.  

Desalinated water produced by the company reaches 40 million people daily, according to the international consumption per household.  

“ACWA Power has been at the forefront in mitigating water resources challenges over the past decade and a half through innovative, resilient solutions that are benefitting millions of people across the world,” said Kashif Rana, chief portfolio management officer of ACWA Power. 

“Enhancing capacity is a significant milestone not only for us, but for our industry. I am confident that through our expertise we will continue to build water security reliably and responsibly for Saudi Arabia and the world,” he added. 

The release further noted that reverse osmosis technology has been incorporated in all of the company’s projects, which saves up to 80 percent more energy than the conventional processes.

ACWA Power is anticipated to boost its capacity by around 15 percent through developing three new desalination projects in 2023.  

“As the leading water desalination operator in the world today, managing 6.4 million m3/day of desalinated water at lowest possible cost, ACWA Power is continuing to bring an innovative, and practical change to the industry, as we have been doing since 2006,” said Dr. Tariq Nada, the vice president of Water and Technical Service at the company.

Closing bell: Saudi bourse slips 29 points to close at 10,811 

Closing bell: Saudi bourse slips 29 points to close at 10,811 
Updated 30 January 2023

Closing bell: Saudi bourse slips 29 points to close at 10,811 

Closing bell: Saudi bourse slips 29 points to close at 10,811 

RIYADH: Saudi Arabia’s Tadawul All Share Index fell 28.81 points — or 0.27 percent — on Monday to close at 10,810.68. 

While MSCI Tadawul 30 Index ended flat at 1,492.97, the parallel market Nomu fell 27.67 points to 19,151.14. 

TASI’s total trading turnover of the benchmark index on Monday was SR5 billion ($1.33 billion), with 69 stocks of the listed 223 advancing and 135 retreating. 

Fawaz Abdulaziz Alhokair Co., also known as Cenomi Retail, was the topmost gainer of the day, rising 7.03 percent to SR18.88. 

The company was also the topmost gainer on Sunday as it rose 9.98 percent, following the announcement of its plans to divest 26 non-strategic brands to rationalize its brand portfolio. 

The franchisee retailer wants to focus on “champion brands” occupying the No. 1 or No. 2 positions in their sectors.  

The other top gainers were East Pipes Integrated Co. for Industry, healthcare player Al Hammadi Holding, Al Kathiri Holding Co., and Allianz Saudi Fransi Cooperative Insurance Co. 

The worst performer on Monday was Alinma Hospitality REIT Fund, which fell 4.80 percent to SR9.52 on its debut after opening at SR9.25. 

The SR1.2 billion fund was listed on Monday at SR10 per unit, taking the total number of real estate investment trusts in the primary market to 18. 

Subscriptions to the fund’s units took place during the period from Oct. 30 to Nov. 7, 2022. A minimum of 50 units were allocated to each subscriber, while the remaining shares were allocated pro-rata.    

The other stocks that performed poorly included Halwani Bros. Co., Yanbu Cement Co., Allied Cooperative Insurance Group, and Mulkia Gulf Real Estate REIT. 

Among sectoral indices, 12 of the 21 listed on the stock exchange declined, while one stayed flat and the rest advanced. 

The Media and Entertainment Index was the worst-performing sector as it fell 2.01 percent to 22,423.88, weighed down by its vital constituent, Saudi Research, and Media Group, which stumbled 2.48 percent to SR189. 

The Software & Services Index was the best-performing index thanks to Elm Co., which jumped 3.08 percent to SR354.60. On the other hand, Al Moammar Information Systems Co. moved up 2.34 percent to SR96.20. The other gainers were Arabian Internet and Communications Services Co. and Arab Sea Information System Co. 

On the announcements front, Saudi Paper Manufacturing Co. informed the stock exchange that its shareholders approved on Jan. 29 the board of directors’ recommendation to repurchase up to 1 million treasury shares, not exceeding 5 percent of the issued capital. 

The decision came as the board and executive management saw that the share market price was less than its fair value. 

The repurchase will be financed from the company’s resources using its cash balances or credit facilities, the company said in the statement to Tadawul.   

GCC banks to refrain from redeeming hybrid capital as volatility rises: S&P Report 

GCC banks to refrain from redeeming hybrid capital as volatility rises: S&P Report 
Updated 30 January 2023

GCC banks to refrain from redeeming hybrid capital as volatility rises: S&P Report 

GCC banks to refrain from redeeming hybrid capital as volatility rises: S&P Report 

RIYADH: Gulf Cooperation Council banks will refrain from redeeming the hybrid capital instruments at the first call date for the next 12 to 24 months, owing to the increasing volatility, scarce liquidity and significant rise in the cost of capital, said S&P Global Ratings in its latest report. 

Interest rates in the Gulf have been rising quickly as central banks matched course with the US in support of their currency pegs with the US dollar.

“Liquidity is becoming scarcer and more expensive, even in the Gulf. Current market conditions mean banks that replace an existing hybrid capital instrument with a new one could incur a significant increase in their cost of capital,” said Mohamed Damak, primary credit analyst at S&P Global Ratings in Dubai, in the report. 

Over the past decade, the GCC banks have shown a marked preference for conventional and Islamic hybrid capital instruments, resulting in their contribution to the total adjusted capital increasing from 2.3 percent at the end of 2011 to 13.5 percent as of Sept. 30, 2022. 

While some banks have abstained from issuing hybrid instruments, others have almost a quarter of their TAC in hybrids. Most GCC banks have also issued only additional Tier 1 instruments, which absorb losses or conserve cash while operational.  

For instance, banks in the UAE and Bahrain issued a large portion of their AT1 instruments on the international capital market in hard currencies. In contrast, Saudi Arabia and Qatar focused on the local market, with issuance denominated in local currencies. 

Local investors, in this case, may include cash-rich governments and their related entities, which invested in providing support for banks while receiving a defined return. 

“Both Islamic and conventional hybrid AT1 instruments allow issuers to suspend payments —periodic distributions for the Islamic instruments and coupons for the conventional instruments — without triggering a default, while the bank is still a going concern,” said Damak in the rating report.  

With low-cost hybrid instruments no longer available, S&P Global expects more noncall decisions in the GCC, such as Qatari and Omani issuers choosing to refrain from redeeming hybrid instruments on the first call date over the past three years.

American carmaker Canoo ties up with GCC Olayan to supply EVs in Saudi Arabia  

American carmaker Canoo ties up with GCC Olayan to supply EVs in Saudi Arabia  
Updated 30 January 2023

American carmaker Canoo ties up with GCC Olayan to supply EVs in Saudi Arabia  

American carmaker Canoo ties up with GCC Olayan to supply EVs in Saudi Arabia  

RIYADH: American electric vehicle startup Canoo signed an agreement with Saudi Arabia’s General Contracting Co. Olayan to sell, service and distribute its cars in the Kingdom. 

This collaboration falls in line with Saudi Arabia’s Vision 2030 strategy to adopt electric vehicles and sustainable mobility solutions.  

In addition to fleet solutions, both companies plan to create a joint venture to initiate a digital vehicle ecosystem for service maintenance repair, local assembly and ultimately manufacturing, according to a recent press release. 

“We recognize that there is a growing demand for sustainable mobility solutions in Saudi Arabia, partly driven by the Kingdom’s launch of the Saudi Green Initiative and its pledge to achieve net zero by 2060,” said CEO of Olayan Saudi Holding Co. Uwaidh Al-Harethi.  

“With that in mind, we are pleased to sign the product and service distribution agreement with Canoo and are proud to be the exclusive distributor of its electric vehicles in our market,” he added.  

GCC Olayan, a prominent multi-national subsidiary of OSHCO, has been providing leading brands in the Kingdom for more than 75 years.  

"Canoo vehicles are built on the company’s proprietary multi-purpose platform architecture that integrates all high-tech components such as the motors, battery module and other critical driving components,” stated the press release. 

The company said the vehicles will offer more usable interior space, better driver ergonomics and improved road visibility.  

Its unique design will also enable the company to localize the offering, as well as provide for a scalable local manufacturing approach, revealed the press release.  

Al-Harethi noted, “the new partnership will combine GCC Olayan’s over 75 years of experience in the automotive and adjacent sectors with Canoo’s innovative electric vehicle technology to cater to this need in the market and contribute to global efforts to tackle carbon emissions as well as to Saudi Vision 2030’s sustainability goals.

Saudi Aramco signs agreements worth $7.2bn at iktva Forum

Saudi Aramco signs agreements worth $7.2bn at iktva Forum
Updated 59 min 2 sec ago

Saudi Aramco signs agreements worth $7.2bn at iktva Forum

Saudi Aramco signs agreements worth $7.2bn at iktva Forum
  • Aramco Digital Co. launched to accelerate digital transformation

DHAHRAN: Saudi Arabian Oil Co. signed deals valued at around $7.2 billion at the seventh edition of the In-Kingdom Total Value Add Forum in Dhahran on Monday.

During the forum, the company also launched Aramco Digital Co. to accelerate its digital transformation efforts. 

“I am proud to announce a major new initiative in digital transformation with the launch of the Aramco Digital Company today. We are planning to invest $1.9 billion over the next three years, making it the biggest Aramco investment in digital to date, while adding value to the Kingdom’s digital ecosystem,” Saudi Aramco’s president and CEO Amin Nasser said. 

Saudi Arabia will be a land of opportunities for investors but “truly a Kingdom of opportunities for all,” he stressed.  

Commenting on the launch of the company, Ahmad A. Al-Sa’adi, Aramco executive vice president of technical services, said: “The launch of Aramco Digital Company is a great example of innovation in action, providing state-of-the-art AI and emerging technology expertise in a vital sector of the economy.” 

The energy giant inked over 100 agreements and memorandums of understanding on the first day of the event, which runs until Feb. 2 and is held under the theme “Accelerating Future Success.”

During the event, Aramco signed a strategic partnership agreement with Zoom, as well as struck a deal with Taulia Inc. to implement supplier financing solutions. 

The company also entered into a definitive agreement with DHL to form a joint venture and offer procurement and supply chain services and partnered with Saudi Arabia’s Ministry of Investment to develop and promote investment opportunities. 

Another agreement signed by Aramco during the event was with Accenture to accelerate system integration and digital solution services. 

It also reached a deal with Achilles to develop and localize environmental, social, and governance rating services. 

The Aramco chief told the audience that the iktva program achieved 63 percent local content in 2022, up from 35 percent in 2015 when it was initially launched. Saudi Energy Minister Prince Abdulaziz bin Salman later said he hoped that the local content would reach 85 percent by 2030.

“Nothing would be possible without the outstanding commitment of our suppliers to localization in the first seven years of iktva. It has made Aramco’s businesses more cost-efficient, more resilient, and even more reliable while sharing the rewards we promised,” Nasser told the crowd. 

“My generation can be proud of passing on a world-leading, integrated energy business, as well as pioneering work on decarbonization and putting Aramco at the heart of lower carbon businesses, such as blue hydrogen, renewables, and more sustainable materials,” he said.  

From left, Saudi Minister of Energy,Prince Abdulaziz bin Salman bin Abdulaziz, Prince Saud bin Nayef bin Abdulaziz, Governor of the Eastern Province and Aramco President and CEO Amin Nasser (Aramco)

The forum highlights collective localization efforts in key focus areas including digital space, sustainability, industrial, and manufacturing sectors.

“The local supplier ecosystem is a top priority for Aramco as well as a major contributor to the Kingdom’s economy. Through this mega program we are helping to create a culture of innovation and provide high-quality jobs for our growing population,” added Al-Sa’adi.

The iktva program encourages the establishment of international companies’ regional headquarters in the Kingdom. Since its inception, more than 150 investments have been made within the Kingdom, including products manufactured for the very first time in Saudi Arabia. The company has also established 16 national training centers in 10 Saudi cities, covering more than 60 trades. To date, more than 48,000 Saudi nationals have graduated from these centers, Al-Sa’adi said. 

A presentation was also made on the first day of the event highlighting the role of Saudi women and their achievements in their respective fields.

Following the presentation, Prince Abdulaziz joked that the dozen or so exceptional women shown in the video will soon be taken from Aramco and employed by the ministry in Riyadh.

“The young ladies that you saw, I'm sure by next year you will find them in Riyadh working in the ministry,” the energy minister told the audience that burst into laughter.

“The vital role of the Ministry of Energy is to act as an enabler and the driver of the localization program. We are in constant contact with all other elements of the ecosystem and stand by or stand ready with other government entities to support, encourage and incentivize them to redouble their efforts,” Prince Abdulaziz said. 

The first day of the event attracted more than 10,000 visitors and over 290 companies took part in the exhibition space.