Oil Updates — Oil prices firm, erasing earlier losses; Crude falls amid OPEC+ output cut rumours; Indian refiners buy Russian oil in dollars

Oil Updates — Oil prices firm, erasing earlier losses; Crude falls amid OPEC+ output cut rumours; Indian refiners buy Russian oil in dollars
Indian companies are still buying Russian oil using dollars after Dubai’s Mashreq Bank declined to handle payments. (Shutterstock)
Short Url
Updated 29 September 2022

Oil Updates — Oil prices firm, erasing earlier losses; Crude falls amid OPEC+ output cut rumours; Indian refiners buy Russian oil in dollars

Oil Updates — Oil prices firm, erasing earlier losses; Crude falls amid OPEC+ output cut rumours; Indian refiners buy Russian oil in dollars

RIYADH: Oil prices firmed on Thursday, erasing earlier losses, on indications that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, might cut output, though a stronger dollar and weak economic outlook kept a lid on gains.

Brent crude futures rose 38 cents, or 0.43 percent, to $89.70 a barrel by 02.40 p.m Saudi time and West Texas Intermediate crude futures rose by 19 cents, or 0.23 percent, to $82.34.

Crude falls amid OPEC+ output cut rumours

Oil prices fell on Thursday, with a stronger dollar paring the previous day’s more than $3 gain, though losses were capped by indications that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, might cut output.

Brent crude futures fell $1.55, or 1.74 percent, to $87.77 a barrel by 11.50 a.m Saudi time and US West Texas Intermediate crude futures dropped by $1.30, or 1.58 percent, to $80.85.

Indian refiners pay dollars for Russian oil after dirham attempts fail

Indian companies are still buying Russian oil using dollars after Dubai’s Mashreq Bank declined to handle payments from at least two refiners in Emirati dirhams as requested by the supplier, according to three sources familiar with the matter.

Russia has been hit by sanctions from the US and allies following its invasion of Ukraine, and Moscow has requested some buyers of its commodities pay using roubles or other currencies than the dollar and euro which its contracts are typically priced in.

Traders supplying Russian oil in July had asked at least two Indian companies to settle in dirham. An invoice from one of the refiners seen by Reuters showed oil payments were calculated in dollars while the payment was requested in dirhams.

The invoice showed payments to be made to Gazprombank via Mashreq Bank, its correspondent bank in Dubai. Mashreq has a branch in New York, according to its website.

The three sources said the dirham payments did not go through because Mashreq declined to facilitate the trade. 

Afghan Taliban sign deal for Russian oil products

The Taliban have signed a provisional deal with Russia to supply gasoline, diesel, gas and wheat to Afghanistan, Acting Afghan Commerce and Industry Minister Hajji Nooruddin Azizi told Reuters.

Azizi said his ministry was working to diversify its trading partners and that Russia had offered the Taliban administration a discount on average global commodity prices.

The move, the first known major international economic deal struck by the Taliban since they returned to power more than a year ago, could help to ease the Islamist movement’s isolation that has effectively cut it off from the global banking system.

Azizi said the deal would involve Russia supplying around one million tons of gasoline, one million tons of diesel, 500,000 tons of liquefied petroleum gas, and two million tons of wheat annually.

On Wednesday, Russia’s state-owned TASS news agency quoted Moscow’s special representative for Afghanistan, Zamir Kabulov, as confirming that “preliminary agreements” had been reached on fuel and food supplies to Kabul.

Russian oil and gas sector braces for tax hikes of over $60 billion

The Russian government has proposed more than $60 billion in tax increases for the oil and gas industry in 2023-2025, the biggest such rises in the country’s history, as it seeks to plug its budget gap, according to a document published on Wednesday.

One of the heftiest burdens was slapped on Kremlin-controlled gas giant Gazprom, which is set to pay an extra 50 billion roubles ($855 million) in mineral extraction tax each month over the three-year period, according to the proposed tax code changes.

The budget is seen gaining an extra 628 billion roubles in 2023, almost 700 billion roubles in 2024, and 750 billion roubles in 2025 just by increasing MET on natural gas production.

Total additional oil and gas tax revenues are seen at 1.28 trillion roubles next year, 1.13 trillion roubles in 2024, and 1.19 trillion roubles in 2025. Prime Minister Mikhail Mishustin said last week Russia’s budget deficit would come in at 2 percent of the gross domestic product in 2023 before narrowing to 0.7 percent in 2025.

The tax change bill will go to parliament for debate and then needs to be signed off by President Vladimir Putin.

TotalEnergies plans to spin off Canadian oil sands assets

TotalEnergies said on Wednesday it is looking to spin off its Canadian oil sands operations and list the new company on the Toronto Stock Exchange, as the assets do not fit with the French oil major’s low-emissions strategy.

At an investor presentation in New York, TotalEnergies said the proposal would be subject to a shareholder vote at its next annual general meeting in May 2023. 

The spin-off would include TotalEnergies’ 24.58 percent stake in Suncor Energy’s Fort Hills oil sands mining project in northern Alberta and its 50 percent stake in the ConocoPhillips-operated Surmont thermal project, as well as midstream and trading-related activities.

Canada’s oil sands hold some of the world’s largest crude reserves but are more carbon-intensive and costly to produce than many conventional oil projects worldwide.

“We are not the best shareholder of these assets because as we have a climate strategy, we don’t want to invest in these assets,” TotalEnergies CEO Patrick Pouyanne said.

The French major’s oil sands assets will generate $1.5 billion of cash flow in 2022, he added.

(With input from Reuters) 


 


Saudi-Chinese relations witness ‘qualitative leap,’ says energy minister

Saudi-Chinese relations witness ‘qualitative leap,’ says energy minister
Updated 07 December 2022

Saudi-Chinese relations witness ‘qualitative leap,’ says energy minister

Saudi-Chinese relations witness ‘qualitative leap,’ says energy minister
  • China has become the top destination for Saudi oil exports
  • President Xi Jinping arrived in Saudi Arabia earlier on Wednesday as part of a three-day visit

RIYADH: Saudi Energy Minister Prince Abdulaziz bin Salman on Wednesday said that relations between the Kingdom and China are witnessing a qualitative leap, reflecting the keenness of both countries’ leaderships to develop them at all levels.

In remarks to the Saudi Press Agency during the Saudi-Chinese Summit in Riyadh, Prince Abdulaziz said that the Kingdom has strong and close strategic relations with China in many fields, the most important of which is energy.

China has become the top destination for Saudi oil exports as part of the high volume of trade exchange between the two countries, with continued annual growth over the past five years, he said, adding that Saudi-Chinese energy ties include multiple joint investments.

China’s President Xi Jinping arrived in Saudi Arabia earlier on Wednesday as part of a three-day visit to the Kingdom following an invitation by King Salman to attend the summit, which will run until Dec. 9.

Prince Abdulaziz highlighted the importance of cooperation between the two countries in maintaining stability of the global oil market, and said that the Kingdom will remain China’s credible and reliable partner in facing future energy challenges.

The minister also reviewed areas of cooperation between the Kingdom and China, mainly through projects to convert crude oil into petrochemicals, renewable energy, clean hydrogen, electricity projects and peaceful uses of nuclear energy, as well as investment in integrated refining and petrochemical complexes in both countries.

He highlighted the two nations’ efforts to boost cooperation in energy supply chains by establishing a regional center in the Kingdom for Chinese factories.


Budget 2023: Saudi Arabia exceeds surplus estimate and revises up GDP forecast

Budget 2023: Saudi Arabia exceeds surplus estimate and revises up GDP forecast
Updated 07 December 2022

Budget 2023: Saudi Arabia exceeds surplus estimate and revises up GDP forecast

Budget 2023: Saudi Arabia exceeds surplus estimate and revises up GDP forecast

RIYADH: Saudi Arabia has recorded a larger-then-expected budget surplus for 2022 of SR102 billion ($27.13 billion) — SR12 billion higher than previously forecast.

The surplus comes as the Kingdom's gross domestic product is also set to exceed expectations — registering growth of 8.5 percent compared with the 7.5 percent estimated in December 2021 and the 8 percent forecast in pre-Budget statement published at the end of September.

GDP growth is forecast to slow to 3.1 percent in 2023.

The revelations came as the Saudi government approved a SR1.114 trillion budget for 2023, itself expected to post a surplus of SR16 billion, Saudi media outlets reported.

The Kingdom expects revenues of SR1.13 trillion next year, Saudi-owned Al Arabiya TV reported. The surplus is equivalent to 0.4 percent of gross domestic product — 0.2 percentage points higher than forecast in September 

Total revenues are forecast at SR1.234 trillion for 2022, while spending is SR1.132 trillion, meaning a surplus of 2.6 percent of GDP — 0.1 percentage point higher than previously forecast.

Saudi Arabia’s inflation, which recorded 2.6 percent in 2022, is expected to fall to 2.1 percent in 2023.

This is a developing story


Saudi’s KAPSARC signs information exchange agreement with Chinese research institute

Saudi’s KAPSARC signs information exchange agreement with Chinese research institute
Updated 07 December 2022

Saudi’s KAPSARC signs information exchange agreement with Chinese research institute

Saudi’s KAPSARC signs information exchange agreement with Chinese research institute

RIYADH: Saudi Arabian think tank King Abdullah Petroleum Studies and Research Center, has signed a Memorandum of Understanding with China’s Economics & Technology Research Institute to exchange information around energy, economics, and climate change

Under the terms of the MoU, both entities will work hand in hand in order to allow for the exchange of research and the generation of actionable insights.

Some of the fields of common interest which will be prioritized topics of research include energy, economics, climate change, sustainability, transition, productivity, hydrogen, carbon capture, among others.

The MoU falls in line with KAPSARC’s mission to utilize applied research and innovation to drive and propel the global energy sector, while the Chinese organization is affiliated with oil and gas firm China National Petroleum Corporation.

“We see a lot of common interest and alignment between China’s and Saudi Arabia's position when it comes to energy and climate. We both understand and reiterate the idea of common but differentiated responsibility when it comes to climate change,” KAPSARC’s president Fahad Alajlan said in a statement.

Through joint workshops, the exchange of ideas and insights between experts, and the creation of platforms that facilitate global cooperation and knowledge exchange, both institutions will work together on deliver research.

“As important energy producers and consumers in the world, China and Saudi Arabia play an important role in maintaining the stability of the international energy market, addressing climate change, and promoting the realization of energy green transformation goals,” added CNPC ETRI’s president Yu Guo.


Saudi bourse crashes to 19-month low, ends at 10,185 points: Closing bell

Saudi bourse crashes to 19-month low, ends at 10,185 points: Closing bell
Updated 07 December 2022

Saudi bourse crashes to 19-month low, ends at 10,185 points: Closing bell

Saudi bourse crashes to 19-month low, ends at 10,185 points: Closing bell

RIYADH: The Tadawul All Share Index collapsed on Wednesday, losing 259.13 points — or 2.48 percent — to close at 10,185.14 points. The last time the index witnessed this level was on April 26, 2021, when the market ended at 10,231.  

The advance-decline ratio took a huge hit, after 158 stocks of the listed 219 dropped while 42 gained. The total trading turnover was SR3.68 billion ($980 million) compared to Tuesday’s SR4.96 billion. 

TASI’s steep fall was driven by the banking index, which fell 448.45 points or 3.88 percent to 11,123.58. While Al Rajhi Bank tumbled 4.88 percent to close at SR74, Riyad Bank shed 4.7 percent to SR30.40. Arab National Bank slumped 4.08 percent to SR30.55. 

The other indices that boarded the southbound bandwagon were MSCI Tadawul 30 Index, which fell by 2.99 percent, Diversified Financials by 2.77 percent, Healthcare Equipment and Services by 2.72 percent and Materials by 2.42 percent.  

According to market sources, the dampened spirit among investors could be attributed to the fear of a global economic downturn. The hunch that the US Federal Reserve could increase interest rates further, following positive US services industry data released on Monday, upset the apple cart. 

The trend is contagious as Saudi Arabia, like most Gulf Cooperation Council countries, has its currency pegged to the US dollar. Therefore, any policy move of the Fed has a direct impact on the regional markets. 

The Qatari index QE General slumped 154.24 points to close at 11,463.07, while the Abu Dhabi index FTSE ADX General declined 71.61 points to end at 10,336.34.  

Back to Tadawul, the top loser of Wednesday was Tourism Enterprise Co., which slid 5.3 percent to close at SR22.90, while the top gainer was Buruj Cooperative Insurance Co. It rose 9.61 percent to end at SR16.66. 

On a positive note, on Wednesday, Scientific & Medical Equipment House Co. bagged a medical operation project tender in the medical centers affiliated with the General Department of Medical Services at a total value of SR8.71 million.  

The project will be implemented in 14 months in four affiliated medical centers across Riyadh, Jeddah, Taif and Al-Muzahimiyah. 


Saudi Arabia’s Ajex expands its logistics services to China and Middle East 

Saudi Arabia’s Ajex expands its logistics services to China and Middle East 
Updated 07 December 2022

Saudi Arabia’s Ajex expands its logistics services to China and Middle East 

Saudi Arabia’s Ajex expands its logistics services to China and Middle East 

RIYADH: Saudi firm Ajex Logistics Services has announced the launch of two new services as a part of its expansion strategy into China and the Middle East. 

The services are the AJEX international e-commerce express, known as ICX, and AJEX international express service, called IXS.  

They will provide businesses in China, Saudi Arabia, UAE, and Bahrain with a portfolio of express cross-border delivery services for customers.  

“Introducing ICX and IXS services in China, Saudi Arabia, UAE and Bahrain is an important enhancement to our service portfolio, driven by our customers’ requirements for speed, reliability, and transparency,” said Ajex's Chief Marketing & Experience Officer Nathalie Amiel-Ferrault.  

She added: “Saudi Arabia is the largest e-commerce market in the Middle East, and the end-consumers expect flexibility, late-night deliveries, and ease of payment, with cash-on-delivery representing more than 30 percent of e-commerce.”   

According to the report, customers will be able to send single-piece and multi-piece shipments from China to Saudi Arabia, UAE and Bahrain in four to seven days.  

Ajex is a joint venture between Ajlan & Bros Holding and SF Express. 

For Saudi Arabia, logistics is a crucial sector to achieve its goals outlined in Vision 2030, as the Kingdom is now diversifying its economy, which has been dependent on oil for several decades.  

Earlier in October, while speaking at the Supply Chain and Logistics Conference in Riyadh, Saudi Minister of Transport and Logistics Saleh Al-Jasser said that the Kingdom is working to inaugurate 59 logistic zones to bolster supply chains and logistic services.  

In June, in an exclusive interview with Arab News, Sulaiman Al-Mazroua, CEO of the National Industrial Development and Logistics Program, noted that the Kingdom’s logistics sector needs a huge investment combined between the government and private sector by 2030.  

He added that Saudi Arabia would provide the right business environment to attract world transportation companies to operate in the Kingdom, which will help the nation emerge as one of the world’s busiest logistics centers.